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

question 358

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 P4,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:

Cost Report

A financial report summarizing the costs associated with a specific project or department.

Relevant Range

The range of activity within which the assumptions about variable and fixed cost behavior are valid.

Car Washing Labour Cost

The expense incurred for labor in the car washing process, covering the wages and benefits of personnel involved in washing cars.

Learning Effect

Describes the improvement in employee efficiency and productivity as they become more experienced with tasks.