What is the short-run break-even price? What are economic profits at this price? Why would a firm be willing to operate permanently at this price?
What will be an ideal response?
The short-run break-even price is the price at which total revenue equals total costs, so that economic profits equal zero. The firm is willing to stay in business at zero economic profits because all opportunity costs are covered, including the opportunity costs of the entrepreneur's time and any other resources he or she brings into the firm. The zero economic profits are associated with a normal rate of return, and the entrepreneur cannot expect to do better anywhere else.
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An individual's demand curve slopes down because
A. the value of the marginal utility falls as the price falls. B. marginal utility falls as price falls. C. of the law of diminishing marginal utility and the rule of equal marginal utilities per dollar. D. of the rule that the marginal utility of the last unit must equal the price.
Table 9.1Disposable IncomeTotal Consumption(Billions of dollars per year)(Billions of dollars per year)$0$50200210At which income level does consumption equal income according to the information provided in Table 9.1?
A. $150 billion. B. $600 billion. C. $250 billion. D. $900 billion.