Questions and Answers
What is the condition of a firm when the price equals average total cost according to the text?
The firm breaks even.
In the short run equilibrium, what can a firm do?
Any of the above.
What happens to supply and prices when new firms enter an industry making an economic profit?
Supply increases and prices fall.
Which curve is compared to the market price to determine if a firm is making a profit or incurring a loss?
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What does it mean for a firm to break even in economic terms?
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What does the firm's economic loss equal to?
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Where is the firm's shutdown point located?
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What is the firm's loss at the shutdown point?
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What does the firm use to determine the profit-maximizing output?
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In the firm's output decision, when is profit maximized?
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What happens if Marginal Revenue (MR) is greater than Marginal Cost (MC) in the firm's output decision?
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What should a firm do when facing an economic loss according to the text?
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In the context of the text, what does the firm need to consider to minimize losses during a temporary shutdown?
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What is a perfectly competitive firm's goal?
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In perfect competition, what does the firm need to decide?
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At what output levels does a firm incur an economic loss according to the text?
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How does a firm maximize its economic profit in perfect competition?
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What is the shutdown point for a firm in perfect competition?
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