If a Perfectly Competitive Firm Finds That Price Is Less

question 18

Multiple Choice

If a perfectly competitive firm finds that price is less than its ATC,then the firm

• A) will raise its price to increase its economic profit.
• B) will lower its price to increase its economic profit.
• C) is making an economic profit.
• D) is incurring an economic loss.
• E) is making zero economic profit.

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Definitions:

Fair Labor Standards Act

A federal law in the United States that establishes minimum wage, overtime pay eligibility, recordkeeping, and child labor standards for full-time and part-time workers.

Overtime Rate

The increased rate of pay that employees receive for hours worked beyond their standard working hours.

Nonexempt Employees

Employees covered by the FLSA requirements for overtime pay.

Consumer Price Index

A measure that examines the weighted average of prices of a basket of consumer goods and services, such as transportation, food, and medical care.