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:

Three-Stage Model

A theoretical model describing a process or phenomenon in three distinct stages, used in various fields such as psychology, sociology, and literature for analysis and understanding.

Dispositional Attribution

The tendency to attribute someone's behavior to their personality or character rather than to situational factors.

Cognitive Load

The total amount of mental effort being used in the working memory, influencing how information is processed and learned.

Internal Factors

Elements or forces within an individual that influence their behavior, emotions, or attitudes, including traits, beliefs, and personal experiences.