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:

Specific Nominal

A term indicating a name given to a specific category or item without implying any rank or quantity.

Sport

An organized competitive and physical activity that follows specific rules and involves skill and physical exertion.

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The act of shedding tears often as a response to an emotional state, pain, or physical irritation.