In the Price Range Below Minimum Average Variable Cost,a Perfectly

question 86

Multiple Choice

In the price range below minimum average variable cost,a perfectly competitive firm's supply curve is

• A)horizontal at the market price.
• B)vertical at zero output.
• C)the same as its marginal cost curve.
• D)the same as its average variable cost curve.
• E)the same as its total variable cost curve.

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Definitions:

Circular Flow Diagram

A visual model of the economy that shows how dollars flow through markets among households and firms.

Households

Economic units that consist of all individuals who live together in one dwelling, making joint decisions about consumption and labor.

Circular Flow Model

An economic model illustrating the continuous movement of money, goods and services, and factors of production between producers and consumers in an economy.

Interdependence

Interdependence is a condition where entities are mutually reliant on each other, implying that actions of one can significantly impact the others.