If in the short run, at the profit maximizing level of output, the average revenue curve of a competitive firm lies above the average cost curve then:
a. the firm is incurring losses.
b. the firm is just able to cover its total cost.
c. the firm enjoys above-normal profits.
d. the firm must shut down.
e. the firm is barely able to cover its variable costs.
c
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The fact that output gaps will not last indefinitely, but will be closed by rising or falling inflation is the economy's:
A. income-expenditure multiplier. B. self-correcting property. C. short-run equilibrium property. D. long-run equilibrium property.
Refer to Figure 16-7. Given that the economy has moved from A to B in the graph above, which of the following would be the appropriate fiscal policy to achieve potential GDP?
A) decrease interest rates B) increase government spending C) contractionary fiscal policy D) increase taxes
Brian Vargo, an auto repair mechanic who remains unemployed because he refuses to work for less than $1,000 an hour, is:
a. counted as part of the labor force. b. considered frictionally unemployed. c. an underemployed worker. d. not counted as part of the labor force. e. considered as productively active.
Consider a demand curve for peaches. Which of the following movements will be observed if the price of peaches decline at a point in time?
a. The demand curve will rotate inward at the given price level. b. The will be a movement up along the demand curve. c. The demand curve will rotate outward at the given price level. d. There will be a downward movement along the demand curve. e. The demand curve will become steeper.