Figure 14-2 Suppose a Firm Operating in a Competitive Market Has the Has

question 348

Multiple Choice

Figure 14-2
Suppose a firm operating in a competitive market has the following cost curves:
-Refer to Figure 14-2. If the market price is Pc, in the short run the firm will earn

• A)positive economic profits.
• B)negative economic profits but will try to remain open.
• C)negative economic profits and will shut down.
• D)zero economic profits.

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Definitions:

Immigrants

People who come to live permanently in a foreign country from their country of origin.

Pure Capitalism

An economic system characterized by the private ownership of resources and the use of prices to coordinate economic activity in unregulated markets.

Economic Question

A query that addresses how to allocate scarce resources to satisfy unlimited wants and needs.

Invisible Hand

A metaphor for the self-regulating nature of the marketplace that guides individuals to unintentionally benefit society through the pursuit of their own interests.