Equilibrium Price Is $19 in a Perfectly Competitive Market

question 178

Multiple Choice

Equilibrium price is $19 in a perfectly competitive market. For a perfectly competitive firm, MR = MC at 120 units of output. At 120 units, ATC is $11, and AVC is $8. The best policy for this firm is to __________ in the short run. Also, this firm earns __________ of __________ if it produces and sells 120 units. Finally, the difference between total revenue and total fixed cost for this firm is __________.

• A)continue to produce; profits; $960; $1,920
• B)continue to produce; losses; $960; $1,000
• C)shut down; losses; $1,200; $2,300
• D)continue to produce; profits; $1,920; $1,960

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Definitions:

Good Increases

A term that is not well-defined in an economic context; possibly refers to growth in the quality or quantity of goods.

Labor

Human effort used in production which can include physical and mental contribution.

Price-Taking Farmer

An agricultural producer who has no control over the prices of the products they sell and must accept the prevailing market prices.

Corn Output

The total amount of corn produced, often considered in agricultural and economic studies regarding productivity and market supply.