Use the following graph to answer the next question.
The graph shows the cost curves for a perfectly competitive firm. If the market price of the product is $1.25 per unit,then the firm will earn how much in profits/losses in the short run?
A. $25
B. $9
C. -$9
D. -$12
Answer: B
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When there is an expansionary gap, inflation will ________, in response to which the Federal Reserve will ________ real interest rates, and output will ________.
A. decline; lower; expand B. increase; raise; decline C. decline; lower; decline D. decline; raise; decline
Starting from long-run equilibrium, a large tax cut will result in a(n) ________ gap in the short-run and ________ inflation and ________ output in the long-run.
A. expansionary; higher; higher B. expansionary; higher; potential C. recessionary; higher; potential D. recessionary; lower; lower
Banks serve the role of a financial intermediary; however, banks cannot survive in the long term if they are paying out more in ___________ to depositors than they are receiving from borrowers.
a. interest b. revenue c. taxes d. income
In the World View article on new tariffs on imported steel from China, the tariff is designed to
A. Protect U.S. steel consumers. B. Protect Chinese workers who produce steel. C. Protect U.S.-based import-competing industries. D. Protect U.S. steel distributors.