If the price of oil, a close substitute for coal, increases then the
A. supply curve for coal will shift to the right.
B. demand curve for coal will shift to the right.
C. equilibrium price and quantity of coal will not change.
D. demand curve for coal will shift to the left.
E. supply curve of coal will shift to the left.
Answer: B
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In the above figure, if the price is $12, a profit-maximizing perfectly competitive firm will have an economic profit
A) of less than $100 but more than $0. B) of more than $100. C) that is negative, that is, it will have an economic loss. D) of zero, that is, it will break even with a normal profit.
A perfectly competitive firm is making an economic profit when
A) its total revenue is greater than its total cost. B) the price is greater than the minimum of its average total cost. C) the price is greater than the minimum of its average variable cost. D) Both answers A and B are correct.