Consider a Firm Operating with the Following: Price = 10;

question 75

Multiple Choice

Consider a firm operating with the following: price = 10; MR = 10; MC = 10; ATC = 10. This firm is:

• A) making an economic profit of 10.
• B) an example of monopolistic competition.
• C) going to go out of business in the long run.
• D) a monopolist for a product with a relatively inelastic demand.
• E) perfectly competitive in long-run equilibrium.

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Definitions:

Break-even Price

The price at which total revenues equals total costs, resulting in neither profit nor loss.

Shut-down Price

The price level at which a business's revenue just covers its variable costs, below which it will cease operations.

Average Variable Cost

The average cost of variable inputs (like labor and materials) per unit of output produced.

Minimum

The lowest point on a nonlinear curve, where the slope changes from negative to positive.