If a profit-maximizing firm in a perfectly competitive market is currently producing the output where (price - average variable cost) = average fixed cost, the firm is:
A. making a positive economic profit.
B. making a zero economic profit.
C. suffering an economic loss.
D. None of these
Answer: B
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A perfectly competitive firm maximizes its profit by producing at the point where
A) total revenue equals total cost. B) marginal revenue is equal to marginal cost. C) total revenue is equal to marginal revenue. D) total cost is at its minimum. E) total revenue is at its maximum.
An industry where the capital-labor ratio is relatively high is characterized as
A. capital intensive. B. labor intensive. C. income intensive. D. market intensive.
According to Chandler (1977), the major event in business development in 1895–1904 was
(a) the Granger cases. (b) Munn v Illinois (1877). (c) the rise of vertically integrated firms. (d) the merger wave.
Suppose that a tariff is imposed on imported cheese. This will have the effect of __________ the price of cheese, __________ consumers' surplus, and __________ producers' surplus
A) increasing; increasing; increasing B) decreasing; decreasing; decreasing C) increasing; increasing; decreasing D) increasing; decreasing; increasing E) decreasing; decreasing; increasing