If price is below average variable costs at all rates of output, the quantity supplied by a perfectly competitive firm will equal
A) zero.
B) the rate of output where price equals marginal cost.
C) the rate of output associated with the break-even point.
D) the rate of output where marginal revenue equals average fixed costs.
Answer: A
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In the mid-to-late 1990s, changes in the health care industry, substantially reduced health care costs relative to other goods and services. Which of the following is an appropriate description of the mechanism behind this supply shock?
A) The AS curve likely shifted to the right which likely explains the short-run fall in unemployment. B) The ensuing increase in productive capacity led to the rightward shift of the LRAS which is a likely explanation for the protracted decline in the unemployment rate of the 1990s. C) A positive output gap would have resulted in the short-run but it was eventually closed by a rightward shift of the LRAS which is a likely explanation for the protracted decline in the inflation rate of the 1990s. D) all of the above E) none of the above
Individuals will make choices to maximize their:
A. constraints. B. utility. C. income. D. values.
Scarcity:
a. exists because resources are unlimited while human wants are limited. b. means we are unable to have as much as we would like to have. c. will likely be eliminated as technology continues to expand. d. is not an issue addressed in economics.
When OPEC cut energy production in 1973, the aggregate supply curve shifted outward.
Answer the following statement true (T) or false (F)