Refer to the Graph Shown

question 41

Multiple Choice

Refer to the graph shown. Suppose the market price is $3. At this price, a perfectly competitive firm should:

• A)continue to produce in the short run but shut down in the long run.
• B)continue to produce in both the short run and the long run.
• C)shut down in the short run but continue production in the long run.
• D)shut down immediately.

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Definitions:

Annually

Pertaining to an event or activity that occurs once every year.

New Home Prices

The selling prices of newly constructed homes currently on the market.

Cost

The amount of money required to purchase goods or services or the value consumed in the production of goods or services.

Discount Rate

The rate of interest applied to loans provided to commercial banks and other financial institutions by the Federal Reserve through its discount window.