Refer to the following graph.
The perfectly competitive firm depicted is currently:
A. incurring a loss that is larger than total fixed cost, and so the firm should shut down.
B. earning positive economic profit.
C. incurring a loss, but the loss is smaller than the firm's total fixed cost.
D. earning zero economic profit.
Answer: C
You might also like to view...
Demand functions are "homogeneous of degree zero in all prices and income." This means:
a. a proportional increase in all prices and income will leave quantities demanded unchanged. b. a doubling of all prices will not alter consumption decisions. c. prices directly enter individuals' utility functions. d. an increase in income will cause all quantities demanded to increase proportionately.
The hypothesis that people believe the best indicator of the future is the recent past is known as:
a. rational expectations. b. adaptive expectations. c. lagged expectations. d. trend expectations.