If a graph of a perfectly competitive firm shows that the MR-MC point occurs where MR (which is equal to the price for perfectly competitive firms) is below AVC and ATC, Ⓒa. the firm is earning negative profit, but will continue to produce where MR=MC in the short run. O b. the firm is earning negative profit, and will shut down rather than produce that level of output. O c. the firm can cover all of fixed costs but only a portion of variable costs. O d. the firm is covering explicit, but not implicit, costs. O e. the firm is still earning positive profit, as long as variable costs are covered.

If a graph of a perfectly competitive firm shows that the MR-MC point occurs where MR (which is equal to the price for perfectly competitive firms) is below AVC and ATC, Ⓒa. the firm is earning negative profit, but will continue to produce where MR=MC in the short run. O b. the firm is earning negative profit, and will shut down rather than produce that level of output. O c. the firm can cover all of fixed costs but only a portion of variable costs. O d. the firm is covering explicit, but not implicit, costs. O e. the firm is still earning positive profit, as long as variable costs are covered.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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