Output (Q)Total Fixed CostTotal Variable Cost020012052207320104201552021Table 9.1Table 9.1 shows the cost structure of a firm in a perfectly competitive market. If the market price is $3:
A. the firm suffers a loss and is better off shutting down.
B. the firm suffers a loss but is better off producing the output level where MR = MC.
C. the market price is greater than the minimum average variable cost.
D. None of these
Answer: A
You might also like to view...
Which good most likely has the lowest elasticity of demand?
A) Macintosh computers B) Toothpicks C) Chemotherapy treatment D) Sirloin steaks E) VCR players
The real wage equals the nominal wage ________ the CPI, all times 100
A) plus B) divided by C) minus D) times
Suppose that a drug for treating cancer is cleared by the Food and Drug Administration and that the company is successful in obtaining a patent for its product. Which of the following is then TRUE?
A) The patent holder now faces barriers to entry. B) The method of producing the product would not be considered intellectual property. C) The patent holder has a monopoly. D) The drug would have many close substitutes.
Describe the impact of contractionary fiscal policy (such as a decrease in government spending) upon Real GDP in both a closed economy and an open economy. In which type of economy would the change in Real GDP be greater?