Firms in long-run equilibrium in a perfectly competitive industry will produce at the low points of their average total cost curves because
a. free entry implies that long-run profits will be zero no matter how much each firm produces.
b. firms seek maximum profits and to do so they must choose to produce where average costs are minimized.
c. firms maximize profits and free entry implies that maximum profits will be zero.
d. firms in the industry desire to operate efficiently.
c
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An economic model is a detailed version of an economic environment
Indicate whether the statement is true or false
What is the price elasticity of supply? List and briefly define three cases of the price elasticity of supply
What will be an ideal response?
The cross elasticity of demand is
A) the percentage change in the demand of one good divided by the percentage change in price of another good. B) the change in the price of one good divided by the change of quantity demanded of another good. C) the percentage change in the quantity demanded of one good divided by the percentage change in the quantity demanded of another good. D) the percentage change in the price of one good divided by the percentage change in the price of another good.
Assume you pay a premium of $0.50/bu for a soybean call option with a strike price of $9.20/bu and that the current futures price is $8.90/bu. What is the option's current intrinsic value?
A. $0.50/bu B. $0.30/bu C. $0/bu D. $-0.50/bu