Firms That Charge a Price for Their Output in Excess

question 3

Multiple Choice

Firms that charge a price for their output in excess of marginal cost in the short run

• A)are not maximizing profits.
• B)cannot find buyers for their output.
• C)are charging a markup.
• D)will suffer huge losses.

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Definitions:

Equilibrium

A state where supply equals demand in a market, resulting in no inherent force for price change.

Equilibrium Price

The market price at which the quantity of goods supplied is equal to the quantity of goods demanded, also known as the market-clearing price.

Shortage

A scenario in which the need for a product surpasses the amount available at a particular price.

Quantity Demanded

The total amount of goods or services that consumers are willing and able to purchase at a given price level in a given period.