QUESTION 16 Jose's restaurant operates in a perfectly competitive market. At the point where marginal cost equals marginal revenue, ATC= 20, AVC= 15, and the price per unit is 17. In this situation, a. Jose's restaurant is earning a positive economic profit. b. Jose's restaurant should shut down immediately. c. the market price will rise in the short run to increase profits. d. Jose's restaurant is making a loss but should continue to operate, because shutting down is more costly.

QUESTION 16 Jose's restaurant operates in a perfectly competitive market. At the point where marginal cost equals marginal revenue, ATC= 20, AVC= 15, and the price per unit is 17. In this situation, a. Jose's restaurant is earning a positive economic profit. b. Jose's restaurant should shut down immediately. c. the market price will rise in the short run to increase profits. d. Jose's restaurant is making a loss but should continue to operate, because shutting down is more costly.

ECON MICRO

5th Edition

ISBN:9781337000536

Author:William A. McEachern

Publisher:William A. McEachern

Chapter8: Perfect Competition

Section: Chapter Questions

Problem 2.4P

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