Explain why each of the following statements is false. What needs to be changed in each case to make the statement correct?
a. The competitive firm sets its price so that P = MC.
b. A firm will shut down when price is less than average cost.
c. Profits are profits, whether they are accounting or economic profits.
d. Costs are costs, whether they are implicit or explicit-they are still costs.
e. The supply curve for the firm in perfect competition is its marginal cost curve.

Question

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The Answer of Explain why each of the following statements is false. What needs to be changed in each case to make the statement correct?
a. The competitive firm sets its price so that P = MC.
b. A firm will shut down when price is less than average cost.
c. Profits are profits, whether they are accounting or economic profits.
d. Costs are costs, whether they are implicit or explicit-they are still costs.
e. The supply curve for the firm in perfect competition is its marginal cost curve.

Explain Why Each of the Following Statements Is False