Which Statement Is TRUE

question 221

Multiple Choice

Which statement is TRUE?

• A)If the price falls below the average total cost,the firm will earn economic profits.
• B)Price and marginal revenue are the same in perfect competition.
• C)Economic profit per unit is found by subtracting AVC from the price.
• D)Economic profit is always positive in the short run.

---

Definitions:

Returns To Scale

The rate at which production output increases as a result of proportional increases in all inputs.

Marginal Product

The additional output that results from using one more unit of a particular input, holding all other inputs constant.

Production Function

A mathematical equation that describes the maximum output that can be produced with a given set of inputs, such as labor and capital.

Output

Refers to the total amount of goods or services produced by an entity in a given period.