If the price is less than a perfectly competitive firm's minimum average variable cost, the firm

A) makes an economic profit.
B) operates and incurs an economic loss equal to total fixed cost.
C) operates and incurs an economic loss equal to average variable cost.
D) shuts down and incurs an economic loss equal to total fixed cost.
E) shuts down and incurs an economic loss equal to average variable cost.

D

Economics

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There is public dissaving if

A) G + TR > T. B) G + TR < T. C) TR < G + T. D) TR > G + T.

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The abnormal net income model

A) assumes that economic profits cannot be earned in the short run. B) assumes that economic profits cannot be earned in the long run. C) employs economic profit in its valuation of a firm. D) none of these choices.

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