If ATC = $25, AVC = $20, TFC = $600

question 35

Multiple Choice

If ATC = $25, AVC = $20, TFC = $600, MR = $15 and MC = $15, then the result for the perfectly competitive firm will be:

• A) a loss of $10 per unit.
• B) a loss of $600.
• C) continuing to operate because it covers its variable costs.
• D) breaking even because MR = MC.

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Definitions:

Magical Thinking

Belief in causal relationships between actions and events which logically cannot be justified by reason and observation.

Causal Attribution

A mental process of figuring out the reasons behind certain behaviors and outcomes, attributing them to internal or external factors.

Cause-and-Effect

A relationship where one event (the cause) makes another event happen (the effect), establishing a connection between two or more phenomena.

Illusion of Control

The belief that one can exert more influence over events than is actually the case.