Suppose That Price Is Below the Minimum Average Total Cost

question 239

Multiple Choice

Suppose that price is below the minimum average total cost (ATC) but above the minimum average variable cost (AVC) and that the market price is expected to rise at least to ATC in the near future. In the short run, a firm that is a price taker would

• A) immediately shut down and get out of the industry.
• B) continue to produce a quantity such that marginal revenue equals marginal cost.
• C) shut down temporarily, in hopes of restarting in the near future.
• D) cut price and expand output in hopes of achieving economies of scale

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Definitions:

Net Exports

The difference between a country's total value of exports and its total value of imports over a specific time period.

GDP

Gross Domestic Product is the total valuation of all products and services generated inside a nation's boundaries during a certain time frame.

Sectors

Distinct subsets of the economy, categorized by the type of activity involved, such as the agriculture, manufacturing, or services sectors.

Japanese Yen

The official currency of Japan, symbolized as ¥ and known for its role in international trade and investment.