In the Short Run, If a Perfectly Competitive Firm Is

question 110

Multiple Choice

In the short run, if a perfectly competitive firm is producing at a price above average total cost, its economic profit must be:

• A) positive.
• B) zero.
• C) negative.
• D) normal.

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Definitions:

Factor 1

An element or component that contributes to a particular result or situation; can be considered as a contributing variable in different contexts.

Profit

The financial gain obtained when the revenue from selling goods or services exceeds the costs involved in their production or provision.

Production Function

A production function is an equation that describes the maximum output of a good or service an economy or firm can produce given the input resources it has available.

Labor

The human effort, whether physical or mental, used in the production of goods and services.