5. Economic profit: a. cannot be negative. b. can exceed the risk-adjusted norma

Question

5. Economic profit:
a. cannot be negative.
b. can exceed the risk-adjusted normal rate of return.
c. is less than the risk-adjusted normal rate of return.
d. does not reflect the cost of owner-supplied inputs.

6. In long-run equilibrium, profits in a perfectly competitive industry equal:
a. zero.
b. the risk-adjusted cost of capital.
c. abnormal profits.
d. fixed and variable costs.

7. If P = $6 and MC = $4 + 0. 4Q, the competitive firm's profit-maximizing level of output is:
a. 5
b. 0.2
c. 8
d. 15

9. If market demand curve is given by the equation Qd = 4,000

Explanation / Answer

5. Economic profit: a. cannot be negative. b. can exceed the risk-adjusted norma

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