Question
A perfectly competitive firm is producing at the output where MR = MC. At this quantity, ATC = $40, P = $35, and AVC =
A perfectly competitive firm is producing at the output where MR = MC. At this quantity, ATC = $40, P = $35, and AVC = $32. Which of the following statements is correct?
1- The firm has an economic profit, it is in the short run, and it should stay open.
2- The firm has an economic loss, it is in the long run, and it should stay open.
3- The firm has an economic loss, it is in the short run, and it should shut down.
4- The firm has an economic loss, it is in the long run, and it should shut down.
5- The firm has an economic loss, it is in the short run, and it should stay open.
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International Economics Theory and Policy
Authors: Paul R. Krugman, Maurice Obstfeld, Marc J. Melitz
9th Edition
978-0132146654, 0132146657, 9780273754091, 978-0273754206
