If a graph of a perfectly competitive firm shows that the MR = MC point occurs where MR is above AVC but below ATC,
A) the firm is earning negative profit, and will shut down rather than produce that level of output.
B) the firm is earning negative profit, but will continue to produce where MR = MC in the short run.
C) the firm is still earning positive profit, as long as variable costs are covered.
D) the firm is covering explicit, but not implicit, costs.
E) the firm can cover all of fixed costs but only a portion of variable costs.
B
You might also like to view...
Promoters for the Rolling Stones were clearly "short selling" when
A) they distributed their latest CD to radio stations free of charge. B) they sold their latest CD to retailers at wholesale prices. C) they sold the world-tour concert tickets weeks in advance. D) they promoted the band without Bill Wyman, the original bass player.
When OPEC raised the price of oil, it created a:
A. demand-pull inflation. B. cost-push inflation. C. demand-push inflation. D. cost-pull inflation.