If the Price Is Greater Than the Average Variable Cost

question 170

Multiple Choice

If the price is greater than the average variable cost and less than the average total cost at the profit-maximizing quantity of output in the short run,a perfectly competitive firm will:

• A)continue to produce at an economic loss.
• B)earn an economic profit.
• C)encourage other firms to enter the industry.
• D)produce more than the profit-maximizing quantity.

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Definitions:

Profits And Losses

A financial metric indicating the positive (profits) or negative (losses) financial outcomes of a business's operations.

Scarce Resources

Resources that are limited in supply and are not available in sufficient quantities to satisfy all the various ways a society wants to use them.

Society

A group of individuals living together in a more or less ordered community with shared laws, traditions, and values.

Economic Profit

The disparity between a company's complete earnings and all its expenses, encompassing both direct and potential costs.