-Use the Figure Above to Answer This Question

question 4

Multiple Choice

-Use the figure above to answer this question. Consider a perfectly competitive firm in a short-run equilibrium. Figure ________ shows a firm in bad times because the firm makes a(n) ________.

• A) A; economic loss of $4 so it must close
• B) C; normal profit and can stay open in the long run
• C) B; economic loss of $3 per unit
• D) B; economic profit because the price exceeds average variable cost
• E) A; economic loss of $4 per unit if the firm decides to operate

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Definitions:

Fiscal Policy

Changes in government spending and tax collections designed to achieve full employment, price stability, and economic growth; also called discretionary fiscal policy.

Paradox Of Voting

A situation in democratic decision-making where rational individual choice can lead to an outcome that seems irrational or suboptimal for the group.

Principal-Agent Problem

A dilemma in economics where one party (the agent) is expected to act in the best interest of another party (the principal) but may have a conflict of interest.

Paired-Choice Votes

Paired-choice votes involve voters making choices between pairs of candidates or options rather than voting for a single option amongst many.