If a Perfectly Competitive Firm Is Faced with Average Revenue

question 23

Multiple Choice

If a perfectly competitive firm is faced with average revenue below average variable cost it will produce zero output so as to reduce its

• A)costs to below its revenue.
• B)costs to zero.
• C)losses to the amount of its fixed costs.
• D)losses to the amount of its variable costs.
• E)losses to the amount of its marginal costs.

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Definitions:

Reluctant

Feeling or showing hesitation, unwillingness, or disinclination to do something.

Refuge

A place of safety or sanctuary, offering protection from danger or distress.

Northern Plains

A vast geographic region in the United States, lying east of the Rocky Mountains and consisting of open land, used primarily for farming and ranching; includes parts of several states such as Montana, North Dakota, and South Dakota.

Firearms

Devices designed to launch one or more projectiles driven by rapidly expanding high-pressure gas produced chemically by exothermic combustion of propellant within an ammunition cartridge.