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:

Apparent Authority

The perception created by the actions of a principal, leading third parties to believe that an agent has authority to act on behalf of the principal.

Warranties

Legally binding guarantees provided by a seller to a buyer, assuring that a product or service meets certain quality and performance standards.

Limitation

A legal restriction or time frame within which certain actions must be taken, such as filing lawsuits or making claims, to remain valid or enforceable.

Directly Liable

Refers to the legal responsibility that falls directly on an individual or entity due to their actions or omissions.