A perfectly competitive firm breaks even at the level of output where
A. P = ATC.
B. P = MC.
C. P > ATC.
D. P < ATC.
Answer: A
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Excess burden calculations typically assume many other distortions.
A. True B. False C. Uncertain
Since it is always a negative number, economists use the convention of taking the absolute value of:
A. income elasticity of demand. B. cross price elasticity of demand. C. price elasticity of supply. D. price elasticity of demand.
Refer to the graph above. If the price of the product decreases from $6 to $5 because of a decrease in demand (not shown), total revenue would:
A. increase by $300. B. decrease. C. increase by $100. D. stay the same.
Refer to Figure 15.6. Which of the following Fed actions is most likely to decrease the aggregate demand curve from AD2 to AD1?
A. Lowering the discount rate. B. Buying bonds in the open market. C. Raising the federal funds rate. D. Decreasing the reserve requirement.