Figure 16-6 -Refer to Figure 16-6.The Firm Depicted in Panel B Faces

question 163

Multiple Choice

Figure 16-6

-Refer to Figure 16-6.The firm depicted in panel b faces a horizontal demand curve.If panel b depicts a profit-maximizing firm,

• A) it could be operating in either a perfectly competitive market or in a monopolistically competitive market.
• B) it would not have excess capacity in its production as long as it is earning zero economic profit.
• C) it is able to choose the price at which it sells its product.
• D) the firm can always raise its profit by increasing production since consumers will buy as much as the firm can produce.

---

Definitions:

Least-Squares Fit

A method of estimating the parameters of a model by minimizing the sum of the squares of the differences between the observed and predicted values.

Pass%

The percentage of individuals or units that meet or exceed a defined benchmark or standard.

Standard Error

A measure of the statistical accuracy of an estimate, often used to quantify the uncertainty in the mean of a population estimated from a sample.

Pearson's Correlations

A measure of the linear correlation between two variables, ranging from -1 to 1, where 1 means a perfect positive linear correlation, and -1 means a perfect negative linear correlation.