1. A perfectly competitive firm will operate and incur an economic loss in the short run if
A) it knows it can recoup the loss in the long run.
B) the loss is smaller than its total fixed costs.
C) shareholders do not know about the loss.
D) the loss can offset future profits.
2. A perfectly competitive firm's short-run supply curve is the same as its
A) ATC curve.
B) MR curve.
C) AVC curve above its minimum.
D) MC curve above the minimum of the AVC curve.
3. If firms in a perfectly competitive industry are presently earning zero economic profit, then
A) some of those firms will leave the industry, because firms cannot persistently go without making economic profit.
B) new firms will enter the industry, because the new entrants would be ensured of doing as well as in their best foregone alternative.
C) some of the firms will temporarily shut down.
D) there is no incentive for either entry or exit.
4. In the short run, perfectly competitive firms ________ but in the long run, perfectly competitive firms ________.
A) can incur an economic loss; incur an economic loss
B) can incur economic losses; make an economic profit
C) must make an economic profit; make an economic profit
D) can incur an economic loss; make zero economic profit