Suppose that a firm in a competitive market has the following cost curves: PRICE 20 18 16 41312 10 8 6 4 2 MC 2 3 QUANTITY 4 ATC AVC 5 Refer to Figure 14-1. If the market price is $5, the firm will earn a. negative economic profits in the short run but remain in business. b. negative economic profits and shut down. c. zero economic profits in the short run. O d. positive economic profits in the short run.

Suppose that a firm in a competitive market has the following cost curves: PRICE 20 18 16 41312 10 8 6 4 2 MC 2 3 QUANTITY 4 ATC AVC 5 Refer to Figure 14-1. If the market price is $5, the firm will earn a. negative economic profits in the short run but remain in business. b. negative economic profits and shut down. c. zero economic profits in the short run. O d. positive economic profits in the short run.

Essentials of Economics (MindTap Course List)

8th Edition

ISBN:9781337091992

Author:N. Gregory Mankiw

Publisher:N. Gregory Mankiw

Chapter13: Firms In Competitive Markets

Section: Chapter Questions

Problem 6QR

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