If the Price Is Less Than a Perfectly Competitive Firm's

question 253

Multiple Choice

If the price is less than a perfectly competitive firm's minimum average variable cost,the firm

• A) makes an economic profit.
• B) operates and incurs an economic loss equal to total fixed cost.
• C) operates and incurs an economic loss equal to average variable cost.
• D) shuts down and incurs an economic loss equal to total fixed cost.
• E) shuts down and incurs an economic loss equal to average variable cost.

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Definitions:

Bailment

The act of temporarily placing control over or possession of personal property in the hands of another, for a specified purpose.

Tangible

Anything that can be physically touched or is material in nature.

Bailed Property

Property that has been transferred into the temporary custody of another (the bailee) with the expectation that it will be returned to the owner.

Non-Exclusive Possession

A legal arrangement where property or an asset can be used or occupied by more than one party simultaneously.