In the short run, a firm should shut down its business if price is less than:
A. ATC.
B. AR.
C. MC.
D. AVC.
Answer: D
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The demand for bus service is perfectly elastic at a price of $1.25 a ride. The table above shows the bus company's marginal cost and the marginal social cost of the bus service
If the government levies a tax on bus rides so that the bus company takes into account the marginal social cost, the tax will be ________ a ride. A) $0.75 B) $1.60 C) $1.25 D) $3.25
The table above shows the marginal costs and marginal benefits of college education. If 20 million students are enrolled, the marginal external benefit is
A) zero. B) $4,000. C) $5,000. D) $7,000.
Which of the following is most likely to cause a leftward shift of the demand curve for a normal good in the current period?
What will be an ideal response?
Figure 6.5 shows the short-run and long-run effects of an increase in demand of an industry. The market is in equilibrium at point A, where 100 identical firms produce 6 units of a product per hour. If the market demand curve shifts to the right, which of the following statements is true in the short run?
A. The market price rises to $12, which is greater than the average total cost. B. Each existing firm maximizes its profit by producing the output where marginal cost equals $12. C. Each existing firm produces two more units per hour, compared to its initial profit-maximizing output level at point A. D. All of these are correct.