Suppose the market price is $5, marginal cost is $4, and average total cost is $2. The perfectly competitive firm in that market is
A) earning $3 in economic profits per unit of output and is not maximizing profits.
B) earning $2 in economic profits per unit of output and is maximizing profits.
C) earning $1 in economic profits per unit of output and is not maximizing profits.
D) none of the above: Insufficient information is given.
A
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With regard to capital budgeting decisions, when the initial cash investment is compared against the present value of cash returns from the next best alternative, it is referred to as
a. opportunity cost b. rate of return c. internal rate of return d. discounted payback rule e. net present value
The AS curve shows the total quantity of goods and services firms produce at any given price level.
a. true b. false
If the firm has already reached the minimum efficient scale, then:
A. any additional output will not result in a lower long run average cost. B. any additional output will result in a lower long run average cost. C. additional output will result in a lower long run marginal cost. D. the firm is profit maximizing in the long run.
Which of the following goods has the property of rivalry?
A) national defense B) a highway C) air to breath D) an outdoor movie screening