In the Long Run, the Firm in Exhibit 10­7 Can

question 30

Multiple Choice

In the long run, the firm in Exhibit 10­7 can expect

• A)to earn an economic profit of $760
• B)earn an economic profit of $950
• C)earn zero economic profit
• D)earn an economic profit of $990
• E)suffer a loss of $1,000

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Definitions:

Private Cost

Private cost is the cost incurred by an individual or company in producing goods or services, excluding externalities.

External Benefit

A positive effect of a transaction or activity on a third party who did not choose to incur that benefit.

Externalities

Financial implications or effects that influence bystander third parties and may be either beneficial or harmful.

Incentives

Factors that motivate or encourage individuals to perform actions or make decisions.