Comparing the Short-Run and Long-Run Profit-Maximizing Positions of a Perfectly

question 3

Multiple Choice

Comparing the short-run and long-run profit-maximizing positions of a perfectly competitive firm,which statement is true?

• A)Price will equal marginal cost in the short run,but not necessarily in the long run.
• B)Economic profit may exist in the short run and in the long run.
• C)The firm will produce at minimum average cost in both the short and long run.
• D)Price should equal average cost in the long run,but not necessarily in the short run.
• E)The firm may have unexploited economies of scale in both the short run and the long run.

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Definitions:

Future Value

(1) A payment’s equivalent value at a subsequent date, allowing for the time value of money. (2) The total of principal plus interest due on the maturity date of a loan or investment.

Month-start Payments

Payments that are due at the beginning of each month.

Retirement Plan

A retirement plan is a financial strategy designed to provide individuals with income or support upon retiring from active employment.

Compounded Monthly

Interest calculation method where interest is added to the principal sum at the end of each month, with each following month's interest calculated on the new total.