When a perfectly competitive firm finds that its market price is below its minimum average variable cost, it will sell
A) the output where marginal revenue equals marginal cost.
B) any positive output the entrepreneur decides upon because all of it can be sold.
C) nothing at all; the firm shuts down.
D) the output where average total cost equals price.
Answer: C
Economics
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Pooling of risk occurs when depository institutions
A) make assets more liquid. B) specialize in loaning only to good borrowers. C) bring lenders together. D) lend to a variety of different borrowers.
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When misallocation of resources for production of a good results in spillover effects on third parties, there is a
A) market failure. B) government failure. C) legislative failure. D) productive failure.
Economics