If a Firm Is Making Zero Economic Profit, It

question 15

Multiple Choice

If a firm is making zero economic profit, it

• A) will be forced to shutdown and leave the market.
• B) will also generally be making zero accounting profit.
• C) is doing as well as typical firms in other markets.
• D) will not survive in the long run.

Calculate and interpret the value of the marginal product of labor.

Understand the derivation of a firm’s demand for labor from its decision to supply goods.

Identify the factors of production and their impact on marginal product.

Comprehend the concepts of income, wealth, and economic measurements.

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Definitions:

Game Theory

A theoretical framework for conceiving social situations among competing players and analyzing strategies in situations of conflict and cooperation.

Collude

To cooperate with others secretly or unlawfully to deceive or gain an unfair advantage, often in a way that is deceitful or fraudulent.

Cartels

Organizations or associations formed by businesses in the same industry to regulate production, fix prices, or otherwise control and limit competition.

OPEC

The Organization of Petroleum Exporting Countries, an intergovernmental organization focused on coordinating and unifying petroleum policies among its member countries to secure fair and stable prices for petroleum producers.