At the short-run break-even point, the perfectly competitive firm is
A. earning positive economic profits.
B. just covering its total variable costs.
C. earning zero economic profits.
D. earning negative economic profits.
Answer: C
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At potential real GDP:
a. there is zero unemployment. b. there is no seasonal unemployment. c. there is no frictional unemployment. d. unemployment is at its natural rate. e. cyclical unemployment equals approximately 5 percent.
To achieve a $500 billion increase in AD, if the MPC is 0.8, what increase in government purchases would be called for?
a. $625 billion b. $500 billion c. $400 billion d. $100 billion
Suppose a report on the internet indicates that job prospects for graduates are bright because full employment is achieved automatically. Economists are likely to
a. be disappointed in the degree of economic understanding possessed by the author of the report b. be excited about the earning potential of new entrants into the labor market c. be anxious about inflationary indicators d. anticipate a recession e. encourage a tax cut to stimulate the economy
Microeconomics and macroeconomics are closely intertwined
a. True b. False Indicate whether the statement is true or false