Jose's Restaurant Operates in a Perfectly Competitive Market

question 471

Multiple Choice

Jose's restaurant operates in a perfectly competitive market. At the point where marginal cost equals marginal revenue, ATC = $20, AVC = $15, and the price per unit is $10. In this situation,

• A)Jose's restaurant is earning a positive economic profit.
• B)Jose's restaurant should shut down immediately.
• C)Jose's restaurant is losing money in the short run but should continue to operate.
• D)the market price will rise in the short run to increase profits.

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Definitions:

Social-Cognitive Explanation

An approach in psychology that emphasizes the role of cognitive processes in understanding social behavior.

Hidden Observer Theory

A concept in hypnosis positing that a separate consciousness is formed in an individual that is aware of all things during hypnosis.

Behavioral Theory

A theory that focuses on studying and modifying observable behavior through conditioning processes.

Hallucinogen

A substance causing alterations in perception, mood, and thought, typically inducing visions or hallucinations without external stimuli.