Are the following statements true or false? Explain your answer in 2-3 sentences

ID: 1204290 • Letter: A

Question

Are the following statements true or false? Explain your answer in 2-3 sentences.

a) If economic profits are positive, firms will enter the industry in the short run. ($500)

b) A firm will make a profit when the price it charges exceeds the average variable cost of the chosen output level ($500).

c) A firm that receives a price greater than its average variable costs but less than its average total costs should shut down. ($500)

d) In order to maximize profits in the short run, a firm must maximize its revenue. ($500)

a) False. If economic profits are positive then, firms will enter the industry in the long run.

b) False because firm is not able to cover all its cost.

c) False firm has to continue its production since firm is able to cover its variable cost and some of its fixed cost.

d) False

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