Suppose a Firm Sells Its Product at a Price Lower

question 432

Multiple Choice

Suppose a firm sells its product at a price lower than the per-unit implicit costs of producing it. Which of the following statements is definitely true?

• A)The firm will earn positive accounting and economic profits.
• B)The firm will face accounting and economic losses.
• C)The firm will face an accounting loss but earn positive economic profits.
• D)The firm may earn positive accounting profits but will face economic losses.

---

Definitions:

Other-race Effect

The tendency to more easily recognize faces of the race that one is most familiar with (often one’s own race) than those of other races.

Ingroup Bias

The tendency to favor members of one's own group over those from external groups.

Social Identities

The part of an individual's self-concept derived from their perceived membership in social groups.

Outgroup Homogeneity

The perception that members of an out-group are more similar to each other than they actually are, especially when compared to the perceived diversity within an in-group.