In a perfectly competitive market, if P < MC, then
A. too much output is being produced.
B. production is efficient, as the firm is earning profits.
C. the firm is paying a price for resources that is too high.
D. too little output is being produced.
Answer: A
You might also like to view...
Suppose that this graph describes the current labor market for high school teachers:
Given an initial wage of w*, then immediately following a decrease in supply:
A. the reservation wage of each remaining teacher will fall. B. there will be a shortage of high school teachers. C. there will be an excess supply of high school teachers. D. the equilibrium wage will fall.
In inflation-adjusted terms, the largest deficits in the twentieth century
A. resulted from World War II. B. were caused by huge tax cuts in the 1980s. C. resulted from the Vietnam War. D. resulted from spending increases in the 1990s.
Budget deficits are inflationary when
a. the Federal Reserve contracts the money supply. b. the economy has lots of slack and the aggregate supply curve is horizontal. c. the economy is at full employment and the aggregate supply curve is vertical. d. private citizens buy the bonds to finance the debt.
What could be a potential explanation for a firm selling virtually identical products under different brands?
A) Consumers are well informed about the quality of the products. B) Consumers believe that the products' quality is similar and thus firms are able to price discriminate. C) Consumers always favor private-label brands. D) Consumers believe that the products' quality differs and thus firms are able to price discriminate.