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Chrome File Edit View History Bookmarks People Window Help Econ Chi × assessment/take/launch.jsp?courseassessmentjd. c a https://learn. QUESTION 5 2 points Save Ans In the short run, a competitive firm may choose to operate at a loss: O a. to recover a portion of its fixed costs. O b, only if those losses are economic losses. O c. to ensure that other firms make a loss as well. O d. to gain market power in the future. O e, only if those losses are accounting losses. QUESTION 6 2 points Save Answer A firm will shut down in the long-run if the: O a. price is above the minimum average total cost (ATC) ( b. price is anywhere above the minimum average variable cost (AVC). O c. price is equal to the minimum average total cost (ATC) O d. firm is making zero economic profits O e price is anywhere below the minimum average total cost (ATC). QUESTION 7 2 points Saved If the short-run supply curve and the demand curve intersect below the long-run supply curve, firms will experience cost curve. economic profits, meaning the price is-_ the minimum point on the average total a. negative; above b. negative; below O c. positive; below o d. positive: above O e. zero, above QUESTION 8 2 points Save Answer Refer to the accompanying graph to answer the questions that follow Price and MC Cost ATC

Explanation / Answer

5. Option B is correct.

Economic loss implies that the opportunity costs are not covered by the revenued earned by the firm. However, the accounting costs have been recovered. So even if the firm is not making a economic profit, it would still operate.

6. Option E is correct.

When price is below ATC then the firm is not able to recover its cost and is incurring a loss. Hence it would rather shut down.

7. Option B is correct.

When the intersection of demand and supply curve is below the long run level, then there are economic losses and the prices are below the ATC.

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