A Competitive Firm Operating in the Short Run Is Producing

question 36

Multiple Choice

A competitive firm operating in the short run is producing at the output level at which ATC is at a minimum.If ATC = $8 and MR = $9,to maximize profits (or minimize losses) ,this firm should:

• A)increase output.
• B)reduce output.
• C)increase price.
• D)do nothing;because it is already maximizing profits.

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Definitions:

Alpha

A threshold value in hypothesis testing that determines the level of significance, usually set to 0.05 or 0.01.

Type I Error

An error in hypothesis testing that occurs when the null hypothesis is wrongly rejected, falsely indicating a significant result.

Two-tailed Hypothesis

A hypothesis test that considers both directions of an effect, allowing for the possibility of difference in either direction from the null hypothesis.

Critical Values

Specific points on the scale of a test statistic beyond which we reject the null hypothesis, crucial in hypothesis testing to determine the significance of the results.