Asked by Brianna Dames on May 31, 2024
Verified
In the short run, a perfectly competitive firm earning negative economic profit:
A) is on the downward-sloping portion of its AVC.
B) is at the minimum of its AVC.
C) is on the upward-sloping portion of its AVC.
D) is not operating on its AVC.
E) can be at any point on its AVC.
Negative Economic Profit
A situation where a firm's total revenues are less than the sum of its explicit and implicit costs, indicating a loss in economic terms.
Perfectly Competitive
A market structure where many firms offer products that are similar and entry and exit from the market are easy, leading to price being determined by supply and demand.
AVC
Average Variable Cost, calculated by dividing total variable costs by the quantity of output produced.
- Acquire knowledge on how economic profits, average overall costs, and average variable costs interrelate in the short run.
Verified Answer
Learning Objectives
- Acquire knowledge on how economic profits, average overall costs, and average variable costs interrelate in the short run.
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