A competitive (price-taking) firm will produce so long as its economic profit is sufficiently above zero to enable the firm to pay the owners of the firm for their time and effort.
Answer the following statement true (T) or false (F)
False
Rationale: Economic profit is equal to revenue minus all economic costs -- including the cost of compensating the owners for their time and effort. Thus, the firm will produce so long as profit is at least zero.
You might also like to view...
The total value to society of having garbage removed is greater than the value of baseball games. Why, then, are baseball players paid more than garbage collectors?
A) Garbage removal results in significant external benefits that are not captured in the price paid for garbage removal. As a result, wages of garbage collectors do not reflect their social benefits. B) There is greater competition in the garbage collection industry than there is in Major League Baseball. C) Wages do not depend on total values but marginal values. The marginal revenue product of baseball players exceeds the marginal revenue product of garbage collectors. D) Although the total value of garbage removal is greater than the total value of baseball, wages are determined by average values.
Since 1970, the evidence for the U.S. suggests that the average rate of unemployment required to keep inflation constant has been
A) between 1% and 2%. B) between 2% and 3%. C) between 3% and 4%. D) between 9% and 10%. E) none of the above