Refer to the accompanying figure. If the market for doughnuts is perfectly competitive, and the price of a doughnut is 10 cents, then this firm:
A. should shut down.
B. will earn an economic loss.
C. should produce 50 doughnuts.
D. should shut down in the long run.
Answer: C
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One reason why the "fast-casual" restaurant market is competitive is that
A) consumption takes place in public. B) demand for "fast -casual" food is very high. C) it is trendy and therefore is likely to have a customer following. D) barriers to entry are low.
Which of the following is an assumption of the Lewis two-sector model?
a. surplus labor in the rural sector b. high unemployment in the urban modern sector c. rising real urban wages d. rising marginal product of labor in the rural sector
If in a market the last unit of output was sold at a price higher than marginal cost,
A) producers are better off producing more. B) consumers are better off if less of the product is sold. C) social welfare is not maximized. D) the unit increased total profit.
Which of the following macroeconomic schools of thought has dominated the economics profession from the 1940s through the 1960s?
a. New classical economics b. Classical economics c. Keynesian economics d. Rational economics e. Positive economics