A firm will not shut down in the short run as long as\ it is at the point where MR = MC and:
A. P > AVC.
B. P > ATC.
C. P > MC.
D. P > AFC.
Answer: A
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When used with a natural monopoly, an average cost pricing rule results in
A) the efficient level of output. B) economic losses for the firm. C) the need for government to subsidize the natural monopoly. D) zero economic profit for the firm. E) the firm making an economic profit.
If education creates positive externalities,
a. private markets provide less than the socially optimal quantity of education b. private markets provide more than the socially optimal quantity of education c. the marginal private benefit curve is higher than the marginal social benefit curve d. the marginal private cost curve is higher than the marginal social cost curve e. the government should impose a depletion tax
When economic growth occurs it will: a. eventually eliminate scarcity
b. shift the production possibilities curve to the left. c. be a product of luck. d. often result from improved technology.
How do critics of discretionary stabilization policy view frequent changes in spending and tax policy?
A. The changes make the economy smoother, although it may not look that way to individual firms. B. The changes make life more difficult and hectic for Congress and the Fed. C. The changes smooth out the business cycle, making planning easier. D. The changes cause more instability in the economy and make planning more difficult.