Assume a perfectly competitive firm is producing 500 units of output, P = $7, ATC of the 500th unit is $6, marginal cost of the 500th unit = $7, and AVC of the 500th unit = $5. Based on this information, the firm is:
A) earning an economic profit of $500.
B) earning an economic profit of $1,000.
C) incurring a loss of $500.
D) incurring a loss of $1,000.
A
You might also like to view...
On the boundary of the utility possibility frontier, if the utility of one person increases, that of the other will decline
Indicate whether the statement is true or false
Ricardian equivalence implies a tax multiplier of zero
a. True b. False
An economist wants to study the effect of income on savings. He collected data on 120 identical twins. Which of the following methods of estimation is the most suitable method, if income is correlated with the unobserved family effect?
A. Random effects estimation B. Fixed effects estimation C. Ordinary least squares estimation D. Weighted Least squares estimation
The idea that people will not consciously make decisions that make them worse off is known as
A) rationality assumption. B) the decision duality. C) Adam Smith's doctrine. D) incentive assumption.