If a Graph of a Perfectly Competitive Firm Shows That

question 106

Multiple Choice

If a graph of a perfectly competitive firm shows that the point occurs where MR is above AVC but below ATC,

• A) the firm is earning negative profit, and will shut down rather than produce that level of output.
• B) the firm is earning negative profit, but will continue to produce where in the short run.
• C) the firm is still earning positive profit, as long as variable costs are covered.
• D) the firm is covering explicit, but not implicit, costs.
• E) the firm can cover all of fixed costs but only a portion of variable costs.

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Definitions:

Psychological Principle

Foundational concepts or theories that explain behaviors, thoughts, and emotions within the field of psychology.

Categories

Groupings based on shared characteristics or properties, allowing for easier organization and understanding of different concepts or objects.

Mere Exposure Effect

A psychological phenomenon whereby people tend to develop a preference for things merely because they are familiar with them.

Mere Exposure Effect

The psychological phenomenon where people tend to develop a preference for things merely because they are familiar with them.