If, for a given output level, a perfectly competitive firm's price is less than its average variable cost, then the firm
A) is earning a profit.
B) should shut down.
C) should increase output.
D) should increase price.
Answer: B
You might also like to view...
The above figure shows the labor market in an undeveloped nation. A minimum wage has an effect on the market for low-skilled labor if it is set at
A) $2.00. B) $3.00. C) $4.00. D) all of the above
In the horizontal range of the AS curve,
A. the price level is constant. B. the classical model assumptions apply. C. national income is supply-determined. D. full employment exists.
Suppose lower expectations lead to a decrease of $240 in desired investment in the economy and the marginal propensity to consume is 0.75.Table 10.2Spending CyclesChange in this Cycle's Spending and IncomeCumulative Decrease in Spending and IncomeFirst-cycle spending-$240-$240Second-cycle spending________________Third-cycle spending________________In Table 10.2, what will be the total decrease in aggregate demand resulting from the initial $240 decrease in investment expenditure after an infinite number of cycles?
A. -$240.00. B. -$960.00. C. -$135.00. D. -$555.00.
A decrease in supply will occur when
A) the supply curve shifts downward to the right. B) the supply curve shifts upward to the left. C) the demand curve shifts downward to the left. D) the demand curve shifts upward to the right.