Consider the Following Total Cost Schedule for a Perfectly Competitive

question 32

Multiple Choice

Consider the following total cost schedule for a perfectly competitive firm producing ball- point pens. $$\begin{array} { | c | c | c | } \hline \begin{array} { c } \text { Output } \\\text { per period }\end{array} & \text { TVC } ( \$ ) & \text { TFC } ( \$ ) \\\hline 0 & 0 & 5 \\\hline 10 & 2 & 5 \\\hline 20 & 3 & 5 \\\hline 30 & 6 & 5 \\\hline 40 & 10 & 5 \\\hline 50 & 15 & 5 \\\hline\end{array}$$ TABLE 9- 3
-Refer to Table 9- 3.This firm would shut down in the short run if the market price of its output

• A)dropped below $0.15.
• B)dropped below $0.20.
• C)dropped below $0.30.
• D)dropped below $2.00.
• E)dropped below $3.00.

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Definitions:

Sum of Squares

A statistical measure that quantifies the total deviation of each data point from the mean, squared and summed up.

Regression Analysis

A statistical technique for estimating the relationships among variables, often used to predict the value of a dependent variable based on the value of one or more independent variables.

Error Variable

An error variable represents the difference between observed and predicted values in a model, reflecting the amount of inaccuracy in predictions.

Standard Deviation

The square root of the variance, indicating how data points in a set differ from the mean value.