A competitive (price-taking) firm will produce so long as its economic profit is sufficiently above zero to enable the firm to pay the owners of the firm for their time and effort.
Answer the following statement true (T) or false (F)
False
Rationale: Economic profit is equal to revenue minus all economic costs -- including the cost of compensating the owners for their time and effort. Thus, the firm will produce so long as profit is at least zero.
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Figure 5-6
A shift in the budget line in Figure 5-6 from AB to AC indicates
a.
the price of wine coolers has risen.
b.
income has increased.
c.
the price of beer has fallen.
d.
the price of wine coolers has fallen.
e.
All of the above are correct.
Under rate-of-return regulation, average cost pricing
A) is inflated so the firm can make economic profits. B) includes variable costs but not a cost for capital. C) includes what they consider to be a fair rate of return on investment. D) includes a cost for capital that generates an above normal rate of return.
Japan and Germany are two major __________-oriented systems
A) securities B) equities C) banking D) markets
First-degree and second-degree price discrimination are similar in each of the following ways except which one?
A) They both convert consumer surplus into additional economic profit. B) In both practices, firms earn greater economic profit than if they charged a single price for every unit. C) In both practices, consumers pay higher prices for the first units that they buy. D) They both yield the greatest possible profits to the firm.