If the market price falls below a firm's minimum average total cost, the firm should:
A. consider how to minimize its losses.
B. definitely stop production.
C. pay only fixed costs.
D. definitely continue to operate at a loss.
Answer: A
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A shortage tends to put ________ pressure on the price of the product, which ________ the quantity supplied
A) upward; increases B) upward; decreases C) downward; increases D) downward; decreases
The profit-maximizing rule of production is to produce the level of output where price is equal to marginal cost. Since the marginal cost (MC) curve is U-shaped, the price line running horizontal to the X-axis intersects the MC curve at two points. How is the profit maximization rule applied in this case?
A firm that is a monopsonist in the labor market and a monopolist in the product market will hire labor to the point at which
A. a perfectly inelastic labor supply = perfectly inelastic labor demand. B. a perfectly elastic labor supply = MRP. C. MFC = MRPm. D. where supply of labor = demand for labor.
Candidate A says, "Health care is too expensive in the United States. We need to do something-and quickly-to develop a better, more responsive, less expensive health care system." Candidate B, who is running against candidate A in a two-person race, says, "Health care is too expensive in the United States. We need to do something about it and quickly. I suggest that we have the federal government
develop a centralized system for delivering health care in this country." If you know nothing else about the two candidates, it follows that A) candidate A has taken polls and candidate B has not. B) candidate B has taken polls and candidate A has not. C) candidate B is smarter than candidate A. D) candidate B has a higher probability of winning the election than candidate A. E) candidate A has a higher probability of winning the election than candidate B.