Refer to the above diagram. All data are for the short run. If product price is P3, the firm will:
A. shut down.
B. produce Q5 units and break even.
C. produce Q4 units and break even.
D. produce Q4 units and make an economic profit.
Answer: D
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The United States is currently a net debtor nation. This means that
A) U.S. consumers have a great variety of foreign goods available to them. B) the U.S. economy is in serious trouble if government policies don't change quickly. C) capital outflows from the U.S. are greater than inflows. D) the U.S. is seen as a poor investment by foreign citizens and firms.
Which of the following statements is the MOST accurate about the Law of One Price on Scandinavian ferry lines?
A) Due to menu costs, the Law of One Price does not hold. B) To avoid arbitrage opportunities, the Law of One Price must hold. C) Transaction costs of exchanging currency causes the Law of One Price to fail. D) Transportation costs between ferry lines leads to a violation of the Law of One Price. E) The physical distance allowed the Law of One Price to hold.
Compare the characteristics of loans and marketable securities in terms of liquidity, risk, and information costs
What will be an ideal response?
Describe the argument that education generates a positive externality. Why might this externality not be relevant in terms of economic efficiency?
What will be an ideal response?