If the market price is $5 and you are currently producing at a level where average total cost is $3 and falling, you should:
A. produce until the average total cost and average revenue are equal.
B. shut down.
C. produce only enough to cover variable costs.
D. produce where MR = MC.
Answer: D
You might also like to view...
A negative externality is a situation in which
A) there is a spillover of benefits. B) a cost associated with an economic activity is borne by a third party. C) a firm is paying in excess of the total costs of producing a good. D) none of the above.
If the bidders at a second-price auction have true values of $8, $7, $6, and $5, the item will sell for
a. $8 b. $7 c. just over $7 d. just under $7
A monopolist will not earn any economic profits when
A) AVC is a minimum. B) AFC is very high. C) ATC lies above the demand curve. D) ATC lies below the demand curve.
Refer to the information provided in Figure 27.4 below to answer the question(s) that follow.
Figure 27.4Refer to Figure 27.4. Stagflation would not be caused by a
A. shift to the right of AD. B. decrease in AS. C. higher price level with lower output. D. higher price level with higher unemployment.