Pie-Oh-My, a monopolistically competitive firm, is producing 80 gourmet pies per day and selling each pie for $32. At that production level ATC is $40, AVC is $30, AFC is $10, and both MR and MC are $16. In the short run, this firm should
A. continue to produce 80 pies, as price is greater than AVC.
B. increase output to the point where price equals marginal cost.
C. shutdown and produce zero pies and pay fixed costs.
D. decrease output to the point where price equals average total cost.
Answer: A
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a. Who produces the goods? b. How is production carried out? c. Who consumes what? d. What goods are produced? e. When are goods consumed and produced?
If Maggie can make $80,000 as an accountant, $50,000 as a cashier, $20,000 as a cook, and nothing as an opera singer, she has a comparative advantage in
A) accounting. B) being a cashier. C) being a cook. D) opera singing.
Any costly activity firms undertake to protect their monopoly status is referred to as
a. market power b. price-setting behavior c. rent seeking d. economies of scale e. legal intervention
If ________ equilibrium output ________, the price level rises.
A. potential; is equal to actual GDP B. actual; is below potential GDP C. potential; exceeds actual GDP D. actual; exceeds potential GDP