In the above figure, if the market price is $8, the firm
A) continues to produce but at an economic loss.
B) continues to produce but at an economic profit.
C) shuts down operations.
D) produces 10 units.
A
You might also like to view...
In a perfectly competitive industry, influence over price is exerted by
A. individual sellers. B. individual buyers. C. the largest firms. D. the forces of supply and demand.
When economies of scale exist:
a. per unit production costs increase as output expands b. per unit production costs decline as output expands. c. marginal cost must decrease as output expands. d. per unit production costs remain constant as output expands.
If a non-discriminating monopolist decides to lower its price to sell one more unit of its product, then
a. total revenue rises by an amount equal to the price b. some revenue is lost to the extent that units previously sold at a higher price now sell for a lower price; however, the additional unit sold brings in new revenue c. marginal revenue increases when total revenue increases d. the net effect on total revenue is typically zero since the price must fall e. the net effect on total revenue is typically negative since the price must fall
Briefly explain Schumpeter's model of innovation. Why does an innovator's economic profit eventually reduce to zero?