The Equilibrium Price of a Guidebook Is $35 in the Perfectly

question 299

Multiple Choice

The equilibrium price of a guidebook is $35 in the perfectly competitive guidebook industry.Our firm produces 10,000 guidebooks for an average total cost of $38,marginal cost of $30,and average variable cost of $30.Our firm,in the short run,should:

• A)raise the price of guidebooks because the firm is losing money.
• B)keep output the same because the firm is producing at minimum average variable cost.
• C)produce more guidebooks because the next guidebook produced will increase profit by $5.
• D)shut down because the firm is losing money.

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Definitions:

Import-Export Clause

A provision in the United States Constitution that prohibits states from imposing taxes or duties on imports and exports, with certain exceptions.

Tax

A mandatory contribution to state revenue, levied by the government on workers' income and business profits, or added to the cost of some goods, services, and transactions.

Police Power

The capacity of a state to regulate behavior and enforce order within its territory for the betterment of the health, safety, morals, and general welfare of its inhabitants.

U.S. Constitution

The foundational document that outlines the framework of the federal government of the United States, including its institutions and the rights of citizens.