A firm sells a product in a purely competitive market. The marginal cost of the product at the current output is $3.00 and the market price is $2.50. What should the firm do?
A. Shut down if the minimum possible average variable cost is $2.00.
B. Decrease output if the minimum possible average variable cost is $2.00.
C. Increase output if the minimum possible average variable cost is $2.50.
D. Increase output if the minimum possible average variable cost is $2.00.
Answer: B
You might also like to view...
Use the figure below to answer the following question.
The diagram shows three supply curves for wheat. Which of the following would cause the supply of wheat to shift from S1 to S3?
A. a decrease in the price of wheat B. an increase in the cost of maintaining the equipment used in wheat farming C. an increase in the number of acres of farmland allocated to wheat D. a decrease in the cost of maintaining the equipment used in wheat farming
The individual demand curve for an input such as labor to a firm would be the downward sloping portion of the firm's
A) marginal physical product curve. B) marginal revenue product curve. C) marginal revenue curve. D) total revenue curve.
\What are the marginal propensity to consume (MPC) and the marginal propensity to save (MPS)? How is the MPC related to the consumption function?
The supply curve for a particular bond is horizontal
a. True b. False