As Long as It Does Not Shut Down, a Profit-Maximizing

question 380

Multiple Choice

As long as it does not shut down, a profit-maximizing perfectly competitive firm will

• A) always earn an economic profit.
• B) produce so that marginal revenue equals marginal cost.
• C) produce so that price equals average cost.
• D) never set its price equal to its marginal revenue.

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Definitions:

Import Quota

A government-imposed limit on the quantity of a specific good that can be imported into a country, aimed at protecting domestic industries.

Tariff

A tax imposed on imported goods, often used to protect domestic industries from foreign competition and to raise government revenue.

Tax Revenue

The income that is gained by governments through taxation, which is used to fund public expenses.

Import Quota

A government-imposed limit on the quantity of a specific good that can be imported into a country.