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:

CPA

Certified Public Accountant; a professional designation for accountants who have passed a licensing examination in accounting.

Obvious Error

A mistake made during a transaction or contractual agreement that is clear and undeniable to all parties involved.

Third Party Beneficiary

An individual or entity that is not a direct party to a contract but stands to benefit from its execution or enforcement.

Certification

The process of verifying the authenticity, quality, or qualifications of something or someone through a formal statement or document.