In the long run, a firm in a perfectly competitive industry will supply output only if its total revenue covers its
A) implicit costs. B) fixed costs.
C) explicit costs plus its implicit costs. D) explicit costs.
C
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Suppose a perfectly competitive firm, which is initially in long-run equilibrium experiences a decrease in the wages it must pay its employees. In the short run, which of the following will occur?
A) ATC will shift up and MC will shift down, causing the firm to incur a loss. B) ATC will shift down and MC will shift up, causing the firm to earn a positive economic profit. C) ATC and MC will shift down, causing the firm to earn a positive economic profit. D) ATC and MC will shift up, causing the firm to incur a loss.
A monopoly firm is charging the price the market will bear at a level of output where MC equals $6 and is increasing, MR equals $9, and average variable cost equals $5 . To maximize profits, the firm should: a. increase both output and price
b. increase output but decrease the price. c. decrease output and increase the price. d. decrease both output and price.