In the short-run, can a firm stay in the market if its profit is negative?
A. Yes, because it may have contracts requiring it to stay open.
B. No, shutting down is the best option when profits are negative.
C. No, its investors will require it to shut down if it has negative profits.
D. Yes, if operating minimizes its losses.
Ans: D. Yes, if operating minimizes its losses.
You might also like to view...
Refer to figure 4-17. At a price of
The decision by inflation targeters to choose inflation targets ________ zero reflects the concern of monetary policymakers that particularly ________ inflation can have substantial negative effects on real economic activity
A) below; high B) below; low C) above; high D) above; low
Of the three primary tax sources of revenue for the U.S. federal government, which of the following has trended upward as a percentage of GDP since 1962?
A) corporate income taxes B) social insurance taxes C) sales and excise taxes D) individual income taxes
In a competitive industry the market-determined price is $12. A firm is currently producing 50 units of output; average total cost is $10, marginal cost is $15, and average variable cost is $7. In order to maximize profit, the firm should:
A. produce more because the firm is earning a profit of $100. B. produce more because the next unit of output increases profit by $2. C. keep output the same because the firm is earning a profit of $100. D. produce less because the last unit of output decreased profit by $3.