If the Price Is Consistently Below the Average Variable Cost,then

question 233

Multiple Choice

If the price is consistently below the average variable cost,then in the short run a perfectly competitive firm should:

• A)raise the price.
• B)sell more output.
• C)shut down.
• D)lower the price to sell more.

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Definitions:

Transit

The system or means of moving people or goods from one place to another.

Equilibrium Price

The price at which the quantity of goods demanded by consumers equals the quantity of goods supplied by producers in a market.

Fine Imposed

A penalty, usually in the form of a monetary payment, levied on an individual or entity for violating laws or regulations.

Long-Run Equilibrium

A state in a market where all firms are making normal profits, and there is no incentive for firms to enter or exit the industry.