When a firm is producing at the profit maximizing level of out put and P > ATC, the firm is:
A) breaking even.
B) incurring an economic loss.
C) earning an economic profit.
D) earning a profit or incurring a loss depending on the level of total fixed costs.
C
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Suppose that the cross elasticity of demand for Dell computers with respect to Hewlett Packard computers is 2.1
If Hewlett-Packard lowers its price by 5 percent, other things being equal, what will be the percentage change in the quantity of Dell computers demanded? A) 2.4 percent B) -10.5 percent C) 10.5 percent D) -42 percent
One undesirable effect of social regulation is that it
A. destroys incentives for firms to engage in marginal cost pricing. B. raises prices of goods to consumers, while lowering prices to business and special interest groups. C. reduces the effectiveness of economic regulation. D. affects smaller firms disproportionately, creating anticompetitive effects.