A firm sets its price at $10.00 per unit. It has an average variable cost of $8.00 and an average fixed cost of $4.00 per unit. In the short run, this firm is
a. incurring a loss of $2.00 per unit and should shut down
b. unable to cover all of its fixed cost and hence should shut down.
c. incurring a profit.
d. incurring a loss per unit of $2.00, but since it can still cover its variable costs, should continue to operate
d
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In the short run, if price falls below a firm's minimum average total cost, the firm should shut down
Indicate whether the statement is true or false
Which of the following statements is true?
A) Consumers will buy a product only if it meets a need not met by competing products. B) Consumers will buy a product only if its price is below that of its competitors. C) Sheer chance often plays a significant role in the success or failure of a business. D) Input prices are one of the success factors that firms can control.
American citizens planning a vacation abroad that would require foreign currency would welcome:
A. Depreciation of the dollar. B. Appreciation of the dollar. C. Appreciation of the foreign currency. D. Devaluation of the dollar.
The marginal cost curve for information is upward sloping because:
A. most information is misleading. B. there is only so much to learn about a product. C. most information is provided by sources that have a vested interest in offering false information. D. consumers tend to start with the least expensive sources of information and then progress to more expensive sources.