If a Firm in a Competitive Industry Is Making Zero

question 93

Multiple Choice

If a firm in a competitive industry is making zero economic profit but still producing, it must be the case that:

• A) MC = MR > ATC.
• B) MC = MR
• C) MC = ATC > MR.
• D) MC = MR = ATC.

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Definitions:

Tying Contract

A sales agreement that requires the buyer to purchase another product or service, distinct from the product or service of interest.

Federal Trade Commission Act

A United States law established in 1914 to promote consumer protection and eliminate and prevent anticompetitive business practices.

Clayton Act

A U.S. antitrust law, enacted in 1914, aimed at preventing unfair business practices such as price discrimination, exclusive dealings, and mergers that significantly lessen competition.

Tying Contract

A type of agreement where the buyer is required to purchase a secondary product along with the primary product, often enforced by the seller.