In a Competitive Industry, Which of the Following Cannot Be

question 6

Multiple Choice

In a competitive industry, which of the following cannot be true for a firm in the long run?

• A)Price equals marginal cost.
• B)Profits are maximized.
• C)The firm takes market price as given.
• D)Economic profits equal zero.
• E)Price equals average variable cost.

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Definitions:

Bureaucracy

A large, impersonal organization composed of many clearly defined positions arranged in a hierarchy. A bureaucracy has a permanent, salaried staff of qualified experts and written goals, rules, and procedures. Staff members always try to find ways of running the bureaucracy more efficiently.

Business

Economic activities that involve providing goods or services with the motive of earning profit.

Salaried Staff

Employees who receive a fixed compensation regularly (usually monthly or biannually) regardless of the number of hours worked.

Bureaucracy

A structured organizational system characterized by fixed hierarchical levels, a focus on procedural correctness, and a division of responsibilities designed to streamline operations and decision-making.