In the short run, when the prevailing market price falls below the average variable cost curve, a firm in perfect competition will shut down because:?
A. ?economic profit is zero.
B. ?price is less than marginal revenue.
C. ?marginal revenue is insufficient to pay average variable cost.
D. ?other firms will enter the market seeking profits.
Answer: C
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Which of the following is true of the dominant strategy equilibrium?
A) A dominant strategy equilibrium always leads to the best outcome for each player. B) A dominant strategy equilibrium cannot be a Nash equilibrium. C) A dominant strategy equilibrium is a Nash equilibrium if each player chooses a strategy that is a best response to the strategies of others. D) A dominant strategy equilibrium occurs if the sum of the players' payoff is zero.
When economists speak of the short run, they are referring to _____
a. a specific period of time, usually less than one year b. a specific period of time, more than one year, but less than two years c. a specific period of time just long enough that the quantities of all resources can be varied d. a period of time short enough that the quantities of at least one of the resources cannot be varied e. a period of time short enough that none of the quantities of the resources can be varied
Suppose the seller's opportunity cost of producing shirts is $12 and the buyer's valuation is $22 . If the seller gains $2 more than the buyer from this transaction, what is the price at which the good is exchanged between the two parties?
a. $17 b. $18 c. $19 d. $20
Which of the following illustrates the tragedy of the commons?
a. Overharvesting a species of fish b. Banning the use of oil and gas c. Using coal for manufacturing d. Hunting out of season