Suppose a Typical Firm in a Particular Industry Is Making

question 26

Multiple Choice

Suppose a typical firm in a particular industry is making positive economic profits. These economic profits

• A) reflect a waste of society's scarce resources and reflect inefficient production.
• B) signal owners of factors of production to move their resources out of that industry.
• C) imply that accounting costs are greater than economic costs in this industry.
• D) signal owners of factors of production to move resources into this industry.

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Definitions:

Producer's Surplus

The difference between what producers are willing to accept for a good or service and what they actually receive.

Marginal Cost Curve

A graph showing the change in total production cost that comes from making or producing one additional unit.

Competitive Firm

A company operating in a market where it has little to no market power, and thus sets its prices based on the market conditions.

Variable Factors

In economics, these are inputs or resources whose quantity can be changed in the short term to adjust the level of output.