In the Long Run, All of a Firm's Costs Are

question 580

Multiple Choice

In the long run, all of a firm's costs are variable. In this case the exit criterion for a profit-maximizing firm is to shut down if

• A)price is less than average total cost.
• B)price is greater than average total cost.
• C)average revenue is greater than average fixed cost.
• D)average revenue is greater than marginal cost.

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Definitions:

Invisible Hand Principle

A metaphor described by Adam Smith to illustrate how individuals pursuing their own self-interest can benefit society overall, as if guided by an unseen hand.

Allocation of Resources

The process of distributing available resources among various competing needs and uses to achieve desired objectives and outcomes.

Self-Interest

The action of working towards one's personal advantage, often considered a driving force behind economic decisions.

Equitable Distribution

A legal principle used in family law to fairly divide property and assets between partners during a divorce.