If Price Is Between AVC and ATC, the Best and Most

question 163

Multiple Choice

If price is between AVC and ATC, the best and most practical thing for a perfectly competitive firm to do is:

• A) raise prices.
• B) lower prices to gain revenue from extra volume.
• C) shut down immediately, but not liquidate the business.
• D) shut down immediately and liquidate the business.
• E) continue operating, but plan to go out of business.

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Definitions:

Mutually Agree

A situation in which two or more parties come to a common understanding or consent on a matter.

Executed

indicates that an operation or task has been successfully carried out or implemented to its full extent.

Preexisting Duty Rule

A principle in contract law stating that performing or promising to perform a duty already owed under contract does not constitute valid consideration for a new promise.

Unforeseen Difficulties

Unexpected challenges or obstacles that were not anticipated, making a task or goal harder to achieve.