If Price Falls Below the Minimum Point on the AVC

question 90

Multiple Choice

If price falls below the minimum point on the AVC curve, in the short run the firm should ________, and in the long run the firm should ________.

• A) produce where MC = MR; exit the industry
• B) shut down; exit the industry
• C) produce where MC = MR; expand
• D) shut down; expand

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Definitions:

Chemical Waste

Waste that is made from harmful chemicals and is often a by-product of manufacturing processes, laboratory experiments, and cleanup operations.

Research and Development

The iterative process of systematic work aimed at increasing knowledge to develop new products or improve existing ones.

Multidomestic Strategy

A strategy in which operating decisions are decentralized to each country to enhance local responsiveness.

Transnational Strategy

A strategy that combines the benefits of global-scale efficiencies with the benefits of local responsiveness.