Jose's Restaurant Operates in a Perfectly Competitive Market

question 471

Multiple Choice

Jose's restaurant operates in a perfectly competitive market. At the point where marginal cost equals marginal revenue, ATC = $20, AVC = $15, and the price per unit is $10. In this situation,

• A)Jose's restaurant is earning a positive economic profit.
• B)Jose's restaurant should shut down immediately.
• C)Jose's restaurant is losing money in the short run but should continue to operate.
• D)the market price will rise in the short run to increase profits.

---

Definitions:

Overall Chemical Functioning

A term not commonly defined in specific fields; could refer to the general biochemical processes and reactions occurring within an organism or system. NO.

Metabolism

The biochemical processes that occur within a living organism to maintain life, including the conversion of food to energy and building materials.

Plumbing Tool

A device or implement used by plumbers to repair or maintain plumbing systems, such as wrenches, pliers, and pipe cutters.

Clogged Drain

A blockage in a drain that restricts water flow.