If a Perfectly Competitive Firm Is Producing an Output at Which

question 55

Multiple Choice

If a perfectly competitive firm is producing an output at which price is equal to average total cost, the firm

• A)should shut down.
• B)is breaking even.
• C)is making an economic profit.
• D)is incurring an economic loss.
• E)is not producing its profit-maximizing quantity.

---

Definitions:

Balance of Trade

The difference in value between a country's exports and imports over a certain period.

Goods and Services

Physical items that can be purchased (goods) and intangible assistance or activities provided for consumption (services).

Trade Deficits

A situation where a country's imports of goods and services exceed its exports, resulting in a negative balance of trade.

Saving Rate

The portion of income that is not spent on consumption but is saved or invested for future use.