Consider the Price and Quantity Data Below for a Perfectly

question 83

Multiple Choice

Consider the price and quantity data below for a perfectly competitive firm producing mousetraps.
TABLE 9-1
-Refer to Table 9-1.Suppose this firm is producing 2000 mousetraps and average variable cost is $5.50.What level of economic profit is this firm earning?

• A)$1000
• B)-$1000
• C)$0
• D)$0.50
• E)There is insufficient information to answer to know.

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Definitions:

Slope

A measure of the steepness or incline of a line, representing the rate at which y-values change for each unit increase in x-values.

Pure Competition

A market structure characterized by a large number of small firms, identical products, and free entry and exit from the market.

Long-run Adjustments

Changes a firm or industry makes over a long period to adapt to changes in demand, technology, or other economic factors.

Allocative Efficiency

Occurs when resources are distributed in a way that maximizes the net benefit to society, with goods and services produced at the level where the last unit provides a benefit equal to its cost of production.