Zero economic profits for a perfectly competitive firm in the long run means
A. the firm must exit the industry.
B. the firm is in equilibrium.
C. the firm will shut down until the market improves.
D. average revenue is insufficient to cover long-run average cost.
Answer: B
You might also like to view...
Suppose a frost destroys much of the Florida orange crop. At the same time, suppose consumer tastes shift toward orange juice. What would we expect to happen to the equilibrium price and quantity in the market for orange juice?
a. Price will increase; quantity is ambiguous b. Price will increase; quantity will increase c. Price will increase; quantity will decrease d. Price will decrease; quantity is ambiguous e. The impact on both sides is ambiguous
A monopoly firm operating with no trade will produce the profit-maximizing quantity where:
a. the firm's MC = MR, where MR is declining and below price. b. MR begins to increase and MC begins to decrease. c. P = MC. d. the firm's MC = MR, where MR is declining and equal to price.