If a firm is earning a negative economic profit, it means that:
A. the resources should not be invested in other business opportunities.
B. the opportunity cost is smaller than what the firm is earning.
C. more profits could be earned with the same resources in another industry.
D. it must be earning negative accounting profit.
Answer: C
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Over the past year, an economy's labor supply increased from 100 to 102, its capital stock increased from 1000 to 1030, and its output increased from 500 to 525. All measurements are in real terms
Calculate the contributions to economic growth of growth in capital, labor, and productivity if aK = 0.2 and aN = 0.8.
Refer to the table below. The perfectly competitive market for dairy products has a 40 percent chance of a high price of $3.00 and a 60 percent chance of a low price of $2.00. To maximize expected profit, Happy Cows should produce ________ units and Free Cows should produce ________ units.
Happy Cows and Free Cows are two separate perfectly competitive dairy farms. The table above shows the respective firms' marginal cost at various production levels.
A) 120; 120
B) 140; 120
C) 120; 140
D) 140; 140
Rather than always choosing the best course of action, humans make decisions that are merely good enough. In other words, they are
Ashley, who makes knitted caps, determines that her marginal cost of producing one more knitted cap is equal to $10. A consumer offers her $12 if she sells one more knitted cap to her. Ashley will:
Select one: a. realize that her production is not profitable and shut down her business. b. offer to sell 20 additional knitted caps, since it must be profitable. c. sell the additional knitted cap, since the marginal revenue is greater than the marginal cost for the unit. d. not sell the additional knitted cap, since she does not know what her total costs will be.