Billy Bob's Fertilizer Engineers, a perfectly competitive firm, is incurring a loss, but the price is still above minimum average variable cost. Then in the short run this firm should ________, and in the long run, if there is no change in economic conditions, this firm should ________.
A. produce where MR = MC; exit the industry
B. shut down; expand
C. shut down; exit the industry
D. produce where MR = MC; expand
Answer: A
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The figure above shows the supply curve for soda. The market price is $1.00 per soda. The marginal cost of the 10,000th soda is
A) $0.00. B) $0.50. C) $1.00. D) more than $0.50 and less than $1.00. E) None of the above answers is correct.
According to your authors, the "boom" phase of the so-called "business cycle" is
A) caused by an expansionary increase of the money supply. B) a systematic accumulation of mistakes among businesses and households across the economy. C) undertaken because business planners miscalculate the expected profitability of their new ventures. D) ultimately followed by a recessionary "bust" as people begin to correct for the mistakes they've made during the boom phase of the cycle. E) described correctly by all of the above statements.
Which of the following statements is most accurate regarding who benefits and loses from establishment of a minimum wage above the market clearing wage?
A) Individuals who obtain jobs benefit because they earn a higher wage, but some individuals lose because employers will not hire them at the minimum wage. B) All workers benefit equally from the establishment of the minimum wage because just as many workers as before remain employed, and all earn the higher minimum wage. C) All employers benefit equally from the establishment of the minimum wage because they are able to hire fewer workers at a lower wage. D) All employers lose because they must pay the higher minimum wage to the same number of employees as they did before the minimum wage was established.
Which of the following accounts for the largest percentage of spending by households in the United States?
a. durable goods b. nondurable goods c. services d. insurance payments e. underground activities (e.g., illegal activities)