The Figure Shows a Representative Firm in a Price-Taker Market

question 117

Multiple Choice

The figure shows a representative firm in a price-taker market. Which of the following is true regarding the situation depicted in the figure?

• A) This firm should shut down immediately.
• B) This firm is earning positive economic profit.
• C) This firm is able to cover its variable cost but not its total cost.
• D) All of the above are true.

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Definitions:

Remedy Limitation

Provisions within a contract that limit the types of remedies or compensation one party can seek from another in case of breach.

Liability

Legal responsibility for actions, which can include debts or obligations, and the obligation to make restitution for harm caused.

Defective Product

A manufactured item that has a flaw or weakness making it unsafe or unfit for its intended use.

Negligence Case

Legal disputes that arise when an individual or entity fails to take reasonable care to avoid causing injury or loss to another person, resulting in harm.