Suppose a price-taking firm produces 400 units at its optimal output level. At that output rate marginal cost is $200, average total cost is $240, and average variable cost is $170 . What can you determine about the market price that would force the firm to shut down in the short run?
a. It equals $200.
b. It is between $170 and $240.
c. It is less than $170.
d. It is between $170 and $200.
e. It equals $240.
C
You might also like to view...
An economic model:
A. exactly explains what happens in the real economy. B. discards unnecessary details to clearly demonstrate the central principles of the economic activity. C. approximates all facets of what happens in the real economy. D. does not make clear assumptions about the economic activity.
The vicious circle of poverty refers to a condition where:
a. c and d. b. c and e. c. people are poor because they cannot invest in capital goods and they cannot invest in capital goods because they are poor. d. people cannot invest in capital goods because they are poor and they are poor because they cannot invest in capital goods. e. poverty is relative and poor people remain poor because the wealthy grow wealthier.
When a tax is imposed on a good for which the supply is relatively elastic and the demand is relatively inelastic, a. buyers of the good will incur most of the burden of the tax
b. sellers of the good will incur most of the burden of the tax. c. buyers and sellers will each incur 50 percent of the burden of the tax. d. the equilibrium quantity will increase.
Exhibit 6-6 Marginal utility for data for clothes and amusement Quantity Clothes Amusement 1 15 20 2 13 18 3 10 15 4 8 12 5 6 10 Refer to Exhibit 6-6. Clothes and amusements are priced at $10 each. The marginal utility per dollar for the first unit of amusement is:
A. 0.5. B. 1.5. C. 2.0. D. 5.0.