If a perfectly competitive firm's price is above its average total cost, the firm
A) is earning a profit.
B) should shut down.
C) is incurring a loss.
D) is breaking even.
Answer: A
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An increase in Abigail's income decreases her demand for used cars. For her, used cars are
A) a normal good. B) an inferior good. C) a complement to any good. D) a substitute good.
Assume that a Chrysler automobile sells for $15,000 in the United States and that the exchange rate is $1 = €1.3 . For purchasing power parity to hold, the same car should sell in Germany for:
a. €15,000. b. €11,538. c. €19,500. d. €1,538. e. €15,500.
Critics of Fed independence argue that
A. monetary policy and fiscal policy are necessarily inconsistent. B. political control ensures low rates of inflation. C. monetary policy run by specialists is inherently inflationary. D. unelected officials are undemocratic.
Refer to the graph shown. To maintain the price of euros at $1.00, the government must:
A. sell Q2 - Q0 euros. B. buy Q1 - Q2 euros. C. buy Q1 - Q0 euros. D. do nothing.