If the market price of a perfectly competitive firm's product is below its average variable cost, then the firm's
A) marginal revenue is zero.
B) total revenue is as large as possible.
C) total revenue if it stayed open would be less than its total variable costs.
D) total revenue if it stayed open is less than its total cost but greater than its total fixed costs.
C
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A subsidy is sometimes used by the government to correct the problems associated with
A) negative externalities. B) positive externalities. C) public goods. D) monopolies.
Thompson Corporation is considering the purchase of a new piece of machinery. Thompson expects the new machinery to increase its revenues by $70,000 at the end of year 1, $60,000 at the end of year 2, and $50,000 at the end of year 3 at which point the
machinery will have exhausted its useful life. If the interest rate is 4%, what is the most Thompson should be willing to pay today for this piece of machinery?
To be valid, an economic model must:
A. include every activity which occurs in the real world. B. not be based on an abstraction of the real world. C. be able to predict events occurring in the real world. D. exclude any link to the real world.
Eric, a resident of Sweden, purchases a book printed in the U.S. Which country's exports increase?
a. Sweden's
b. the U.S.'s
c. Sweden's and the U.S.'s
d. neither Sweden's nor the U.S.'s