In the short run, the perfectly competitive firm will always earn an economic profit when
A) P = ATC.
B) P > AVC.
C) P = MC.
D) P > ATC.
Answer: D
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Looking at the components of the income approach we see that
A) compensation of employees is the largest category. B) consumption is the largest category. C) profits are the largest category. D) rental income is the largest category.
How does a single-price monopoly determine the price it will charge its customers?
What will be an ideal response?
Although the FDIC was created to prevent bank failures, its existence encourages banks to
A) take too much risk. B) hold too much capital. C) open too many branches. D) buy too much stock.
Answer the next question based on the following payoff matrix for two oligopolistic firms in which the numbers indicate the profit in millions of dollars for each firm. Firm A? High PriceLow PriceFirm BHigh priceA = $250A = $325??B = $250B = $200?Low priceA = $200A = $175??B = $325B = $175If firm A adopts the low-price strategy, then firm B would adopt the
A. low-price strategy and earn $325. B. high-price strategy and earn $250. C. high-price strategy and earn $200. D. low-price strategy and earn $175.