Suppose Tim's Cowboy boot factory produces in a perfectly competitive market. Suppose the average total cost of cowboy boots is $65, the average variable cost of cowboy boots is $60, and the price of cowboy boots is $62. If the firm is producing the level of output where marginal cost equals price, then in the short run the firm:
A. should shut down.
B. should continue to produce since total revenue exceeds total variable cost.
C. is earning a positive economic profit.
D. can increase profit by increasing output.
Answer: B
You might also like to view...
Answer the next question based on the following data. All figures are in billions of dollars.Personal taxes$40Social security contributions15Taxes on production and imports20Corporate income taxes40Transfer payments22U.S. exports24Undistributed corporate profits35Government purchases90Gross private domestic investment75U.S. imports22Personal consumption expenditures250Consumption of fixed capital25Net foreign factor income10Statistical discrepancy0GDP is ________.
A. $417 B. $492 C. $390 D. $422
The average price of goods and services in the economy is also known as
A) the cost of living. B) the inflation rate. C) a market basket. D) the price level.
A speculator who believes strongly that interest rates will fall would be likely to
A) buy futures contracts on Treasury bills. B) sell futures contracts on Treasury bills. C) sell Treasury bonds in the spot market. D) decrease now the amount of money which he lends.
The U.S. Postal Service
a. has as much monopoly power now as it had 100 years ago b. has lost much of its market power due to new competitors and new technologies c. has increased its prices by less than the rate of inflation during the past 25 years d. is more mechanized and more computerized than its potential competitors e. is a perfectly competitive firm