When a perfectly competitive firm finds that its market price is ...

[Mr3Hunna]

When a perfectly competitive firm finds that its market price is below its minimum average variable cost, it will sell
 
  A) any positive output the entrepreneur decides upon because all of it can be sold.
  B) nothing at all; the firm shuts down.
  C) the output where average total cost equals price.
  D) the output where marginal revenue equals marginal cost.

Question 2

The law of one price
 
  A) is a law passed by Congress that prohibits firms from selling a product at two different prices in the same market at the same time.
  B) states that consumers will pay any price for a product that has a perfectly inelastic demand curve.
  C) states that consumers can only buy one good or service at a time.
  D) states that identical products should sell for the same price everywhere.

[ricroger]

Answer to Question 1

B

Answer to Question 2

D