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Indicate whether each of following statements is true or false and describe why.

1. A competitive firm which is incurring loss must instantly stop all operations (production).

2. A pure monopoly doesn’t have to worry about suffering losses since it has the power to set prices at any level of output it desires.

3. In the long run, firms operating as pure monopolistic competitors and competitors will both tend to earn normal profits.

4. Supposing a linear demand curve, a firm that desires to maximize its revenue will charge a lower price than a firm which wants to maximize its profits.

5. If P > AVC, a firm’s total fixed cost will be greater than its loss.

6. When the firm is capable to set its price, its price will always be less than its MR.

7. A monopoly will always earn economic profits since it is capable to set any price that it desires to.

Macroeconomics, Economics

  • Category:- Macroeconomics
  • Reference No.:- M910668

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