A perfectly competitive firm breaks even at the level of output where
A. P > ATC.
B. P = MC.
C. P < ATC.
D. P = ATC.
Answer: D
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Consider a large public university in which a chemistry lecture is usually attended by 300 students or so but with large amounts of available seats on any given day
Is this a pure public good? If not, why not? Is this good likely to be provided in an efficient manner if the professor is vigilant in making sure that only registered students attend? Explain.
Suppose there are three power-generating plants, each of which has access to 5 different production processes. The table below summarizes the cost of each production process and the corresponding number of tons of smoke emitted each.ProcessABCDE(smoke/day)(4 tons/day)(3 tons/day)(2 tons/day)(1 tons/day)(0 tons/day)Cost to Firm X ($/day)$500$514$530$555$585Cost to Firm Y ($/day)$400$420$445$480$520Cost to Firm Z ($/day)$300$325$360$400$550 For all three firms, the marginal cost of pollution abatement is:
A. increasing. B. decreasing and then increasing. C. constant. D. decreasing.
An economy with an expansionary gap will, in the absence of stabilization policy, eventually experience a(n) ________ in the inflation rate, leading to a(n) ________ in output.
A. decrease; increase B. increase; increase C. decrease; decrease D. increase; decrease
Starting from long-run equilibrium, a large tax cut will result in a(n) ________ gap in the short-run and ________ inflation and ________ output in the long-run.
A. expansionary; higher; higher B. expansionary; higher; potential C. recessionary; higher; potential D. recessionary; lower; lower