If, at the Equilibrium Level of Output, a Typical Competitive

question 135

Multiple Choice

If, at the equilibrium level of output, a typical competitive firm's price is greater than its ATC, the firm

• A)should raise the price.
• B)should lower the price.
• C)should decrease output.
• D)finds that new firms are attracted to this industry.
• E)should increase output.

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Definitions:

Productive Efficiency

A situation where the economy or a production system can no longer produce additional amounts of a good without lowering the production level of another product.

Severe Recession

An extended period of significant decline in economic activity across the economy, lasting more than a few months, characterized by high unemployment, low consumer spending, and decreased industrial production.

Depression

An extended period of significant decline in economic activity across a country or the global economy, marked by high unemployment rates, low consumer spending, and decreased industrial output.

Unemployment Rate

The portion of the workforce currently unemployed but actively searching for work opportunities.