If a Competitive Firm Cannot Earn a Profit at Any

question 73

Multiple Choice

If a competitive firm cannot earn a profit at any level of output during a given short-run period, then which of the following is FALSE?

• A)It will shut down in the short run and wait until the price increases sufficiently.
• B)It will exit the industry in the long run.
• C)It will operate at a loss in the short run.
• D)It will minimize its loss by decreasing output so that price exceeds marginal cost.

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Definitions:

Total Loss

A situation in which property is so extensively damaged that repair is not reasonable and it's considered a complete write-off.

Document of Title

Legal documentation evidencing a person's right to the control or ownership of goods, typically used in the context of shipping or storage.

Risk of Loss

The potential that an investment's value may decrease, or that one may incur losses from a business transaction.

Lumber

Wood that has been processed into beams and planks, a stage in the process of wood production.