1. In the short run, a competitive firm may choose to operate at a loss: A. to recover a portion of its fixed costs. B. only if those losses are economic losses. C. to ensure that other firms make a l

1. In the short run, a competitive firm may choose to operate at a loss:

A. to recover a portion of its fixed costs.

B. only if those losses are economic losses.

C. to ensure that other firms make a loss as well.

D. to gain market power in the future.

E. only if those losses are accounting losses.

2. A firm will shut down in the long-run if the:

A. price is above the minimum average total cost (ATC).

B. price is anywhere above the minimum average variable cost (AVC).

C. price is equal to the minimum average total cost (ATC).

D. firm is making zero economic profits.

E. price is anywhere below the minimum average total cost (ATC).

3. If the short-run supply curve and the demand curve intersect below the long-run supply curve, firms will experience _____ economic profits, meaning the price is _____ the minimum point on the average total cost curve.

A. negative; above

B. negative; below

C. positive; below

D. positive; above

E. zero; above