By Shutting Down When Price Is Less Than Average Variable

question 6

Multiple Choice

By shutting down when price is less than average variable cost at the profit-maximizing level of output,a perfectly competitive firm will limit its losses to its:

• A)total variable costs.
• B)total costs.
• C)total fixed costs.
• D)marginal costs.

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Definitions:

Profit Sharing

A form of compensation whereby a percentage of company profits is distributed to the employees whose work helped generate them.