Answer the following questions true (T) or false (F)
1. In the short run, if price falls below a firm's minimum average total cost, then the firm should shut down.
2. If price is equal to average variable cost, then a perfectly competitive firm breaks even.
3. For a given quantity, the total profit of a perfectly competitive firm is equal to the vertical distance between the firm's total revenue curve and its total cost curve.
1. FALSE
2. FALSE
3. TRUE
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Obstacles in achieving efficiency in a market include
A) public goods. B) the presence of an external cost or benefit. C) competition. D) Both answers A and C are correct. E) Both answers A and B are correct.
If the demand for orange juice is expressed as Q = 2000 - 500p, where Q is measured in gallons and p is measured in dollars, then at the price of $3, the demand curve
A) is elastic. B) has a unitary elasticity. C) is inelastic. D) is perfectly inelastic.