Is the following statement true or false? Explain your answer fully. If you use terms that...

Is the following statement true or false? Explain your answer fully. If you use terms that someone who has never taken an economics course may be unfamiliar with, please define them and use them correctly. That is part of your grade.

In the short run, a firm operating in a competitive industry will produce the quantity of output where price equals marginal cost as long as the price is greater than average variable cost.

Solutions

Expert Solution

This is statement is true

In the short run the prices should be at least equal to the minimum average variable cost so that the firm is indifferent between producing and not producing. Price greater than the minimum of average variable cost will allow the firm to operate because it is now covering its variable cost and some portion of its fixed cost. The marginal cost function is used as the supply curve to determined what level of output should be produced at the given price.

Rahul Sunny answered 1 year ago

Next > < Previous

Related Solutions

Indicate whether the following statements are TRUE or FALSE and explain your answer fully with an...

Indicate whether the following statements are TRUE or FALSE and explain your answer fully with an adequate explanation a)An efficient outcome is desirable because it allows us to make Pareto improvements. b)Unlike a consumer, a firm does not face a budget constraint. c)If the wage rate increases, then those who work have a stronger incentive to supply labor.

Indicate whether the following statements are TRUE or FALSE and explain your answer fully, but succinctly....

Indicate whether the following statements are TRUE or FALSE and explain your answer fully, but succinctly. Without an adequate explanation, you will get no credit. a)An efficient outcome is desirable because it allows us to make Pareto improvements. b)Unlike a consumer, a firm does not face a budget constraint. c)If the wage rate increases, then those who work have a stronger incentive to supply labor.

Is the following statement true or false? Explain and support why you chose your answer. “Water...

Is the following statement true or false? Explain and support why you chose your answer. “Water is actively transported in plants from their roots to their leaves and sugars move down plants from sites of photosynthesis into roots by gravity"

You are to explain your answer to whether the statement is true or false? 1. Gross...

You are to explain your answer to whether the statement is true or false? 1. Gross domestic product measures the value of all goods and services produced in an economy during a period of time. 2. The unemployment rate only goes down when the economy is in recovery. 3. The business cycle has four phases, depression, recession, recovery and expansion. 4. People who are discouraged workers are included in the unemployment rate. 5. The consumer price index is an accurate...

Is the following statement true or false? Give your answer and briefly explain it. "A research...

Is the following statement true or false? Give your answer and briefly explain it. "A research study’s sample can be another research study’s population."

State whether the following statement is True, False, or Uncertain. Be sure to explain your answer....

State whether the following statement is True, False, or Uncertain. Be sure to explain your answer. The marginal propensity to consume from a permanent parallel upward shift in the production function is smaller than the marginal propensity to consume from a temporary parallel upward shift in the production function.

For the questions below, answer if the statement is true or false and explain how you...

For the questions below, answer if the statement is true or false and explain how you reach to your conclusion. a. The Clausius statement of the second law denies the possibility of transferring energy by heat from a cooler to a hotter body? b. The COP if a reversible refrigeration cycles is always equal to the COP of an irreversible refrigeration cycle when each operates between the same two thermal reservoirs. c. The Kelvin–Planck and Clausius statements of the second...

Indicate if the following questions are True or False. Explain “Why” your answer is True or...

Indicate if the following questions are True or False. Explain “Why” your answer is True or False. 1. Marginal costs tend to increase faster than average variable costs as firms produce more. Why? 2. Competitive firms try to become monopolistic firms. Why? 3. For a monopoly, marginal revenue is less than average revenue or demand for any given level of firm production except for its first production unit. Why? 4. Some oligopolistic firms try to collude. Why?

State whether the following statements are true or false, and explain your answer if you judge...

State whether the following statements are true or false, and explain your answer if you judge the statement to be false (a statement must always be true to be considered true). i) In an efficient market all investments should have the same long-run average return ii) In an efficient market all investors should have the same long-run average return iii) Stocks exhibiting positive or negative abnormal returns indicates market inefficiency iv) Evidence of irrational behavior on the...

In this section, describe each statement as true, false or uncertain and explain your answer. Each...

In this section, describe each statement as true, false or uncertain and explain your answer. Each question is worth X marks: all of the marks are for explanation, none, for the true, false or uncertain. Answers should be brief. a) If a country has a floating exchange rate, then the fact that it has a high nominal interest rate (relative to world nominal interest rates) will make it attractive to international investors seeking high returns. b) A country with a...

Subjects