Suppose a perfectly competitive firm's minimum average variable cost is $3 when it produces 50. If the price is $2 and the firm's marginal cost is $2, the firm should
A) continue to produce, but produce more than 50.
B) continue to produce 50.
C) continue to produce, but produce less than 50.
D) shut down.
E) continue to operate, but to determine the amount of production needs more information than is given.
D
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The principle of voluntary exchange is based on the idea of
A) making assumptions. B) rational self-interest. C) thinking at the margin. D) isolating variables.
Which of the following explains why supply curves slope upward?
A) prices and income B) increasing marginal cost C) resources and technology D) substitutes in production and complements in production
Refer to Figure 2-3. Sergio Vignetto raises cattle and llamas on his land. A portion of his land is more suitable for raising cattle, and the other portion is better suited for raising llamas
Which of the graphs in Figure 2-3 represent his production possibilities frontier that displays increasing opportunity costs? A) Graph A B) Graph B C) Graph C D) either Graph A or Graph C E) either Graph B or Graph C
Which of the following is a problem associated with gross domestic product (GDP) as a measure of social welfare? a. It includes many nonmarket activities
b. It takes into account the value of only those goods which are widely used. c. It takes into account the cost of environmental damage caused by pollution. d. It includes intermediate goods as a separate entry. e. It excludes the value of leisure time.