Figure 14-5 Suppose a Firm Operating in a Competitive Market Has the Has

question 201

Multiple Choice

Figure 14-5
Suppose a firm operating in a competitive market has the following cost curves:
-Refer to Figure 14-5. In the short run, if the market price is P4, individual firms in a competitive industry will earn

• A)positive profits.
• B)zero profits.
• C)losses but will remain in business.
• D)losses and will shut down.

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Definitions:

Exchange

The act of trading goods, services, or currencies among parties.

Opportunity Cost

Forfeiting the immediately lesser choice has a cost attached when decisions are being made.

TV Commercials

Short visual advertisements broadcast on television to promote products, services, or ideas to a wide audience.

Opportunity Cost

The price paid for not selecting the next most favorable choice during decision-making.