Assuming Price Is Greater Than Average Variable Cost in the Short-Run

question 42

Multiple Choice

Assuming price is greater than average variable cost in the short-run, the firm will maximize profit if:

• A) marginal profit is zero and marginal revenue is below marginal cost at higher output levels.
• B) marginal profit is zero and marginal revenue is greater than marginal cost at higher output levels.
• C) marginal profit is zero and marginal cost is decreasing.
• D) marginal profit is zero and marginal revenue is decreasing.
• E) marginal profit is zero.

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Definitions:

Blocking

A method used in experimental design to minimize the effects of nuisance variables by grouping units with similar characteristics.

Random Assignment

An experimental technique for assigning individuals to different groups in a study using randomization, ensuring that each participant has an equal chance of being assigned to any group.

Placebo

A safe medication or treatment recommended primarily for its mental comfort to the patient rather than its physical health benefits.

Confounding Variable

An outside influence that changes the effect of a dependent and independent variable, potentially leading to a false association.