If Price Is Above Average Variable Cost and Below Average

question 143

Multiple Choice

If price is above average variable cost and below average total cost, a profit-maximizing price taker should

• A) immediately shut down; failing to do so is contrary to the idea of profit maximization in a competitive market.
• B) continue producing as long as it expects the market price to rise above average total cost in the near future.
• C) attempt to push price upward by slowly reducing output.
• D) cut price so more units can be sold.

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Definitions:

Labeled Data

Data that is tagged with one or more labels, identifying certain properties or classifications, which is used for supervised learning in machine learning algorithms.

Deontology

An ethical theory that suggests the morality of an action depends on its adherence to a set of rules, rather than its consequences.

Moral Duties

Ethical obligations or responsibilities that individuals are expected to adhere to based on moral or ethical principles.

Designated Driver

A person who abstains from alcohol on a social occasion in order to drive companions home safely.