Comparing the Short- Run and Long- Run Profit- Maximizing Positions

question 111

Multiple Choice

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

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

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Definitions:

Equilibrium

A condition in which the equilibrium of market supply and demand stabilizes prices.

Maximin Strategy

A decision rule used in game theory and decision-making to maximize the minimum gain that can be achieved.

Equilibrium

A state in an economy where supply equals demand, leading to a stable price for goods and services.

Advertise

The act of promoting products, services, or ideas through various media channels to influence consumer behavior.