A Firm Will Shut Down Temporarily When the Price Is

question 12

Multiple Choice

A firm will shut down temporarily when the price is so low that total revenue is insufficient to cover the

• A)total cost of production.
• B)total variable cost of production.
• C)total fixed cost of production.
• D)marginal cost of production.
• E)none of the above.

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Definitions:

P = MC

An equation denoting the condition where the price of a good equals its marginal cost, typically associated with perfect competition and profit maximization.

Consumer Surplus

The difference between the total amount consumers are willing to pay for a good or service and the total amount they actually pay.

Product Value

The importance or usefulness of a product to a consumer, often reflected in their willingness to pay for it.

Producing More X

Increasing the output or manufacture of a specific product or commodity, referred to as "X".