Refer to the graph shown. If the market price is $4, a perfectly competitive firm:
A. earns a profit.
B. incurs a loss but can still cover its variable costs and some of its fixed costs.
C. incurs a loss and cannot cover its variable costs.
D. breaks even.
Answer: B
Economics
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Consider an oil company that can pump oil from a reserve either this year or next year. As expected future profits decrease, the extraction quantity this year:
A. Increases due to a higher user cost B. Increases due to a lower user cost C. Decreases due to a higher user cost D. Decreases due to a lower user cost
Economics