A firm is currently selling its product at $20 each. It estimates that its average total cost of production is $100 and its average fixed cost is $40. In the short run the firm should

A. continue production at a point where P = MC.
B. hire more employees.
C. shutdown.
D. buy more capital.


Answer: C

Economics

You might also like to view...

A single-price monopoly

A) must practice price discrimination. B) can lower its price for only a few select consumers if it wants to increase its sales. C) will set its price equal to a consumer's willingness to pay. D) must lower the price for all customers if it wants to increase its sales. E) is able to raise its price as high as it wants and consumers must still buy from it because it is a monopoly.

Economics

Which of the following is a basic assumption of an economic analysis?

a. Private property rights exist and are secure b. A controlled market structure is the key to economic growth. c. In a free market, resources are owned by the government. d. There are no private property rights under a free market economy. e. Social well-being is the prime objective of an entrepreneur.

Economics

Which of the following characteristics differentiates a monopoly from a perfectly competitive firm?

a. The demand curve for a perfectly competitive firm is a downward-sloping line, while the demand curve for a monopoly is a horizontal line. b. The demand curve for a perfectly competitive firm is a horizontal line, while the demand curve for a monopoly is a downward-sloping line. c. The demand curve for a perfectly competitive firm is a horizontal line, while the demand curve for a monopoly is a vertical line. d. The demand curve for a perfectly competitive firm is a downward-sloping line, while the demand curve for a monopoly is a vertical line.

Economics

An individual is said to be a discouraged worker if he or she

A) is working, but prefers not to work. B) is working part time, but would prefer a full time job. C) is working in jobs she/he is not suited for. D) wants to work, and is actively searching for a job. E) wants to work, but has given up searching for a job.

Economics