If a Perfectly Competitive Firm Is Faced with Average Revenue

question 69

Multiple Choice

If a perfectly competitive firm is faced with average revenue below average variable cost it will shut down so as to reduce its

• A) losses to the amount of its marginal costs.
• B) costs to below its revenue.
• C) losses to the amount of its variable costs.
• D) costs to zero.
• E) losses to the amount of its fixed costs.

---

Definitions:

Complete Portfolio

A combination of a risk-free asset and one or more risky assets, structured to meet the investor's risk-return objectives.

Risk-Free Asset

An asset which is assumed to have no risk of financial loss and typically refers to government bonds or bills.

Risky Portfolio

A risky portfolio comprises investments that have a higher degree of risk, aiming for potentially higher rewards but with an increased possibility of losses.

Arithmetic Average

The sum of a series of numbers divided by the count of that series of numbers, commonly used to calculate the mean value of datasets.