If a firm in a perfectly competitive market is currently producing the output where price = marginal cost = average total cost, the firm is:
A. earning a positive economic profit.
B. earning a zero economic profit.
C. suffering an economic loss.
D. All of these
Answer: B
You might also like to view...
If a toy store overestimates the demand for a toy in 2004 and, as a result, has an unexpectedly large number of toys in stock at the end of the year, the value of the inventory of these toys will be considered as: a. investment in 2004
b. investment in 2005. c. consumption in 2004. d. consumption in 2005. e. a part of GDP when the toys are sold.
Why do economists claim the Consumer Price Index (CPI) tends to overstate the actual rate of inflation?
What will be an ideal response?
If the production of a product results in significant external costs, an appropriate government policy might be to
A. subsidize consumers since the good is being under-consumed. B. subsidize the production of the good. C. tax consumers' incomes and thus shift the demand curve to the left. D. tax producers and thus shift the supply curve to the left.
The two-period dynamic monopoly model is more useful than the static monopoly model in analyzing monopoly behavior when
A) the product produced requires a bandwagon effect. B) the product produced generates a positive network externality. C) the monopoly initially uses a lower introductory price. D) All of the above situations.