In an environment characterized by perfect competition, we expect that ________
A) there are very few firms in the economy
B) there are many firms in the economy but a very few have the lion's share of the industry
C) the are many small firms in the economy and every single firm is a price taker
D) the government sets prices for all firms
E) none of the above
C
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Natural monopolies are ________ and ________
A) rival; excludable B) nonrival; excludable C) rival; nonexcludable D) nonrival; nonexcludable
A company finds that at its present level of production, MC = AVC at $15, MC = ATC at $20, and MC = MR at $17. Your advice to the firm regarding its short-run operations is
A) to continue production, as it is earning an economic profit of $2 per unit. B) to continue production, as it is earning an economic profit of $3 per unit. C) to shut down. D) to continue production at a loss.