A Firm Will Continue to Operate in the Long Run

question 29

Multiple Choice

A firm will continue to operate in the long run only if:

• A) it earns a positive rate of return.
• B) it earns a nonnegative economic profit.
• C) it makes a positive accounting profit.
• D) average cost exceeds price.
• E) the average variable cost exceeds price.

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Definitions:

Consumer Welfare

The overall satisfaction, utility, or economic well-being that consumers experience from purchasing and consuming goods and services.

Advertising

The action of calling public attention to products, services, needs, etc., especially by paid announcements in newspapers and magazines, over radio or television, on billboards, etc.

Barriers to Entry

Factors that prevent or hinder companies from entering a specific market or industry, including high startup costs, strict regulations, and established competition, which can protect existing firms from new entrants.

Artificial Differences

Distinctions created or imposed in a situation or between objects that do not naturally or inherently exist.