3) The perfectly competitive firm will always try to produce at a point where

marginal cost is equal to the market price.

marginal cost is less than the market price.

average variable costs are at a minimum.

average costs are at a minimum.

4) In the short run, firms will always earn economic profits.

False

True

5) Suppose a perfectly competitive firm faces the following situation:P= $9; output = 4,000;ATC= $9;AVC = $6; andMC= $9. Which statement accurately describes the firm's and the market's situations?

The firm incurs losses; the market is in a short-run equilibrium.

The firm earns economic profit; the market is in a long-run equilibrium.

The firm earns economic profit; the market is in a short run equilibrium.

The firm incurs a normal profit; the market is in a long-run equilibrium.

6) When the price is greater than the minimum point of the average total cost curve, firms earn economic profits.

False

True