True or False? 13. a) A firm earns a positive economic profit when the market price...

True or False?

13. a) A firm earns a positive economic profit when the market price exceeds its marginal cost.

b) As long as profits remain positive, a firm will want to increase the quantity produced.

c) Only variable costs are relevant to a firm's decision to shut down.

d) When a firm has chosen to shutdown it has exited the industry.

14. a) When a competitive firm earns zero profit, the market price is equal to both the firm's average and marginal costs.

b) A technological advance that reduces firms’ variable costs will lead to higher profits in the long run of a perfectly competitive industry.

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Expert Solution

Rahul Sunny answered 1 year ago

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