If Price Lies Above the Minimum Point on the ATC

question 88

Multiple Choice

If price lies above the minimum point on the ATC curve, in the short run the firm should ________ and in the long run it should ________.

• A) produce where MC = MR; exit the industry
• B) shut down; exit the industry
• C) produce where MC = MR; expand
• D) shut down; expand

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Definitions:

Unenforceable Contract

A contract that is not legally binding and cannot be enforced by law due to certain deficiencies or lack of key requirements.

Adequacy of Consideration

A legal principle that examines whether the value exchanged in a contract is fair and reasonable to all parties involved.

Contract Formation

The process by which parties agree on the terms of a contract, leading to a binding agreement; typically involves offer, acceptance, consideration, and mutual intent.

Past Consideration

A concept in contract law that refers to a benefit or act that has already been given or performed before the promise is made, which is not valid consideration for a current contract.