When a perfectly competitive firm produces where AVC < P < ATC, this is called a
A. profit-minimizing strategy.
B. loss-minimizing strategy.
C. break-even position.
D. loss-maximizing strategy.
Answer: B
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The above figure that most accurately shows a production function is
A) Figure A. B) Figure B. C) Figure C. D) Figure D. E) Both Figure A and Figure B; Figure A for an economy with an excess of labor and Figure B for an economy with a shortage of labor.
What is the long-run effect on the demand curve of a monopolistically competitive firm when more firms enter the market?
A. Demand curve shifts to left. B. Demand curve remains the same. C. Demand curve shifts to right. D. Demand curve become flatter.
Imagine Tom's annual salary as an assistant store manager is $30,000, he owns a building that rents for $10,000 yearly, and his financial assets generate $1,000 per year in interest. One day, after deciding to be his own boss, he quits his job, evicts his tenants, and uses his financial assets to establish a bicycle repair shop. To run the business, he outlays $15,000 in cash to cover all the costs involved with running the business, and earns revenues of $50,000. What are Tom's economic profits?
A. $24,000 B. $35,000 C. -$6,000 D. $50,000
Macro equilibrium is established at which level of real output, given AD1 and AS2 in Figure 8.3?
A. $300 billion. B. $200 billion. C. $100 billion. D. $400 billion.