If a Firm in a Competitive Industry Is Making Zero

question 138

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.
• E) this situation is not possible.

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Definitions:

Gross Earnings

The total amount of money earned by an individual or entity before any deductions are made.

Seasonal Manufacturing

The production of goods in specific seasons of the year to meet seasonal demand.

Average Number

A value found by summing a set of numbers and then dividing by the count of numbers in the set.

Employees

Individuals who are hired by a business or organization to perform specific tasks in exchange for compensation.