If a Perfectly Competitive Firm Is Producing the Short- Run

question 44

Multiple Choice

If a perfectly competitive firm is producing the short- run profit- maximizing quantity and is earning positive economic profits, the firm should anticipate ______.

• A)earning a competitive profit in the long- run
• B)earning economic profits indefinitely
• C)the market equilibrium price to increase
• D)the market supply to decrease

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Definitions:

Economic Losses

Losses incurred when a company or economy's total costs exceed its total revenues, indicating a negative profit situation.

Industry Supply

The total quantity of a good or service that all producers in an industry are willing and able to sell at various prices over a certain period.

Marginal Cost

The elevation in overall cost triggered by assembling an extra unit of a product or service.

Overallocated

The condition of having allocated or committed more resources to a project, task, or item than is available or necessary.