Suppose the market price is $5, marginal cost is $4, and average total cost is $2. The perfectly competitive firm in that market is
A) earning $3 in economic profits per unit of output and is not maximizing profits.
B) earning $2 in economic profits per unit of output and is maximizing profits.
C) earning $1 in economic profits per unit of output and is not maximizing profits.
D) none of the above: Insufficient information is given.
Answer: A
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In the above table, the size of the labor force is
A) 210 million. B) 155 million. C) 140 million. D) 100 million.
The minimum increase in government spending necessary to reach full employment is
A) $2,000 B) $1,000 C) $500 D) $200 E) $100
Refer to the above graph, which shows the market for beef where demand shifted from D 1 and D 2. The change in equilibrium from E1 to E 2 is most likely to result from:
A decrease in the tax on beef products An increase in the price of pork A decrease in consumer incomes An increase in the cost of cattle feed
In a purely competitive market at its long-run equilibrium, which of the following is not true?
A) Price equals marginal cost, and they are equal to the lowest attainable average cost of production. B) The marginal benefit of the last unit of the product equals the marginal cost of producing that unit. C) The maximum willingness of buyers to pay for the last unit of the product equals the minimum acceptable price for the seller of that unit. D) The combined amount of consumer and producer surpluses is at its minimum possible.