If a perfectly competitive firm incurs an economic loss, it should
A) shut down immediately.
B) try to raise its price.
C) shut down in the long run.
D) shut down if this loss exceeds fixed cost.
D
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One of the economic costs of holding currency is that
A) it fulfills no transactions role. B) it fulfills no precautionary role. C) its real value always increases. D) it earns no interest income.
Suppose in the market for used cars, buyers would be willing to pay $9,000 for a car in good condition, while buyers would have to incur a cost of $3,500 to repair a car in poor condition. Assume a risk-averse buyer is aware that some of the cars are lemons, but is uninformed about the probability of a car being in good condition or otherwise. What price would this buyer, seeking only to minimize
risk, be willing to pay for a car? a. $3,925 b. $5,500 c. $7,775 d. $5,850