A Price- Taking Firm in the Short Run Should Not

question 6

Multiple Choice

A price- taking firm in the short run should not produce any level of output unless

• A)average revenue equals or exceeds average variable cost.
• B)marginal revenue equals average total cost.
• C)it is earning positive profits.
• D)marginal revenue exceeds marginal cost.
• E)average revenue equals or exceeds average total cost.

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Definitions:

Setup Times

The duration required to prepare or configure equipment or processes before starting a task or production.

Material Handling

Handling, protecting, storing, and controlling materials and merchandise through the phases of manufacturing, storage in warehouses, distribution to consumers, and their ultimate disposal.

Setup Cost

The expenses incurred to get equipment ready to process a different batch of goods.

Production Cycle

The series of steps involved in producing a good or service, from initial raw materials to the finished product.