A Perfectly Competitive Firm Is Producing Zero Units of Output

question 149

Multiple Choice

A perfectly competitive firm is producing zero units of output in the short run. We know that price is

• A) below the minimum point of its average fixed cost curve.
• B) below the minimum point of its average variable cost curve.
• C) below the minimum point of its average total cost curve.
• D) between the minimum points of its average total cost curve.

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Definitions:

Pearson Correlation

A statistical measure that calculates the strength and direction of a linear relationship between two quantitative variables.

Covariance

A measure that indicates the extent to which two variables change together; if the greater values of one variable mainly correspond with the greater values of the other variable, and the same holds for the lesser values.

Reject Null Hypothesis

To conclude, based on statistical analysis, that there is enough evidence to support the alternative hypothesis over the null hypothesis in a study.

Covariance

A measure indicating the extent to which two variables change in tandem. It shows whether increases in one variable correspond with increases (positive covariance) or decreases (negative covariance) in the other one.