Using Figure 9.1, explain what a firm would do in the short run if the market price of its product were at P4 and it produced Q4 . Is the firm earning an economic profit? Explain
What will be an ideal response?
The firm would continue to produce in the short run. The firm is enjoying pure economic profit since the price is above the average total cost of production.
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A monopolist's demand curve is
a. its marginal cost curve b. its marginal revenue curve c. identical to the market demand curve d. the same as the demand curve of a firm in perfect competition e. nonexistent
GoodPrice Increase Last YearAmusement park tickets5.0%Bowling balls4.2%Camouflage neckties3.1% Refer to Table 8.1, which gives hypothetical data on price changes for three goods. Which good(s) became relatively more expensive for buyers?
A. All three goods became relatively more expensive. B. None of the goods became relatively more expensive. C. Only amusement park tickets became relatively more expensive. D. It depends on the overall rate of inflation in the economy.