A perfectly competitive firm's profit per unit of output equals
a. price minus average variable cost
b. price minus marginal cost
c. total revenue minus total cost
d. price times quantity
e. price minus average total cost
E
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Why is a firm in perfect competition a price taker?
What will be an ideal response?
Suppose a market basket of goods and services costs $400 in the base year and $500 this year. The consumer price index (CPI) for this year is:
a. 25. b. 100. c. 125. d. 500.
From a firm's viewpoint, opportunity cost is the
A) best alternative use customers can find for the firm's output.
B) cost the firm must pay for the factors of production it employs to attract them from their best alternative use.
C) accounting cost of resources.
D) price a firm can charge for its output.
E) cost of acquiring the opportunity to sell to its customers.
Starting from long-run equilibrium, a large tax increase will result in a(n) ________ gap in the short-run and ________ inflation and ________ output in the long-run.
A. recessionary; lower; potential B. expansionary; lower; potential C. expansionary; higher; potential D. recessionary; lower; lower