Which of the following statements best reflects the production decision of a profit-maximizing firm in a competitive market when price falls below the minimum of average variable cost?
a. The firm will continue to produce to attempt to pay fixed costs.
b. The firm will immediately stop production to minimize its losses.
c. The firm will stop production as soon as it is able to pay its sunk costs.
d. The firm will continue to produce in the short run but will likely exit the market in the long run.
b
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Which of the following market types has the fewest number of firms?
A) perfect competition B) monopolistic competition C) oligopoly D) monopoly E) perfect competition and monopolistic competition
Because government bodies have the power to make up for inadequate supply of a good:
A. its presence as a producer is in virtually every market. B. it can be efficiency enhancing in markets for public goods. C. they have incentive to compete with local businesses. D. None of these statements is true.
Supporters of the World Trade Organization contend that it:
A. undermines minimum wage laws in member nations. B. liberalizes trade among member nations. C. imposes safeguards for worker safety in member nations. D. weakens the environmental laws in member nations.
Suppose a country with a fixed exchange rate decides to reduce the price of its currency. This change in policy is called
A) an appreciation. B) a depreciation. C) a peg. D) a devaluation. E) a revaluation.