In the short run, why would a firm in a perfectly competitive market shut down production if the prevailing market price falls below the lowest possible average variable cost?
a. At that point (economic) profit is zero.
b. Below that point average revenue becomes less than marginal revenue.
c. Below that point marginal revenue becomes insufficient to pay for avoidable average variable cost.
d. Below that point other firms with similar cost will find it profitable to enter the market and take away demand from the existing firms.
c
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People with a bad driving record find it difficult to buy automobile insurance because insurance companies fear that ________ may happen if they raise the premiums.
A. risk aversion B. moral hazard C. adverse selection D. none of the statements associated with this question are correct
What is the main difference between the law of demand and the price elasticity of demand?
Please provide the best answer for the statement.
A game in which any gains by the group are exactly offset by equal losses by the end of the game is called the
A) negative-sum game. B) zero-sum game. C) positive-sum game. D) cooperative game.
A profit-maximizing monopoly will NEVER produce along a range of output for which
A. the price elasticity of supply is greater than 1. B. the price elasticity of demand is greater than 1. C. the demand curve is inelastic. D. the demand curve is elastic.