Figure 14-2 Suppose a Firm Operating in a Competitive Market Has the Has

question 348

Multiple Choice

Figure 14-2
Suppose a firm operating in a competitive market has the following cost curves:
-Refer to Figure 14-2. If the market price is Pc, in the short run the firm will earn

• A)positive economic profits.
• B)negative economic profits but will try to remain open.
• C)negative economic profits and will shut down.
• D)zero economic profits.

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Definitions:

Price

The amount of money expected, required, or given in payment for something.

Equilibrium Price

The price at which the supply of an item matches its demand, resulting in market stability.

Market

A venue or mechanism through which buyers and sellers interact to trade goods, services, or financial instruments.

Tax

A compulsory financial charge or levy imposed by a government on individuals or entities to fund public expenditures.