The owner of Tie-Dyed T-shirts, a perfectly competitive firm, has hired you to give him some economic advice. He has told you that the market price for his shirts is $20 and that he is currently producing 200 shirts at an AVC of $15 and an ATC of $25. You tell him he should continue to operate in the short run because
A. he has to pay his fixed costs of $2,000 if he shuts down, which is greater than his loss when he operates.
B. he is earning positive economic profits of $4,000.
C. his loss from operating is only $2,000, which is less than his loss if he shuts down.
D. In fact you do not tell him to operate-he should shut down since he has a loss.
Answer: A
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Refer to Figure 18-1. Area F + G represents
A) the portion of sales tax revenue borne by consumers. B) the portion of sales tax revenue borne by producers. C) the excess burden of the sales tax. D) sales tax revenue collected by the government.
A predominant view among Federal Reserve officials is that
A) the Phillips curve is unimportant. B) the Phillips curve helps us forecast inflation. C) the Phillips curve helps us forecast the nominal interest rate. D) the Phillips curve does not exist in the data.
One of the most common uses of GDP is to:
A. track changes in an economy over time. B. see which country has the fairest distribution of wealth. C. evaluate different standards of living across countries. D. measure the amount of money has been made in the economy.
During this century, court decisions on antitrust have
a. changed from per se, to rule of reason, and back to per se b. changed from rule of reason, to per se, and back to rule of reason c. always emphasized per se d. always emphasized rule of reason e. varied from judge to judge without following any pattern