A firm is currently producing at the point where MC = MR. The situation for the firm at this point is P = $5, Q = 100, ATC = $6, AVC = $5.50. What do you recommend this firm do?

A) Increase production above the current output rate, because MC = MR at this rate of output.
B) Continue to produce the current output rate, because P > AVC.
C) Shut down, because AVC > P.
D) Shut down, because ATC > P.


Answer: C

Economics

You might also like to view...

Along the 45-degree reference line

A) total planned real expenditures = real GDP. B) total planned real expenditures = planned nominal expenditures. C) total planned nominal expenditures = consumption. D) total planned investment spending = planned real expenditures.

Economics

Unemployment insurance:

A. is offered in all countries. B. varies widely across countries. C. is most generous in the United States. D. has a set minimum in the United States, with some states being more generous.

Economics

In the United States during the period from 1870 to 1940, the price level was most likely to

a. fluctuate. b. increase. c. decrease. d. trend generally upward.

Economics

Which of the following programs is on-budget?

A. Social Security B. Student loans C. The post office D. Medicare

Economics