Consider a Perfectly Competitive Firm in the Short Run

question 320

Multiple Choice

Consider a perfectly competitive firm in the short run. Assume the firm produces the profit-maximizing output and earns economic profits. Which statement is FALSE?

• A) Price is equal to marginal cost.
• B) Price is equal to marginal revenue.
• C) Price is equal to average total cost.
• D) Marginal cost is greater than average total cost.

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Definitions:

Inflation

The rate at which the general level of prices for goods and services is rising, and, subsequently, purchasing power is falling.

Unionized Labor

Workers who are members of a union, which is an organization that negotiates with employers on behalf of its members for wages, hours, benefits, and working conditions.

Above-Equilibrium Wages

Wages that are higher than the market equilibrium, often set above the competitive level to attract or retain employees, possibly leading to reduced labor turnover.

Unionized Workers

Employees who are members of a union, which negotiates on their behalf for wages, benefits, and working conditions.