When Price Is Below Average Variable Cost, a Firm in a Competitive

question 451

Multiple Choice

When price is below average variable cost, a firm in a competitive market will

• A)shut down and incur fixed costs.
• B)shut down and incur both variable and fixed costs.
• C)continue to operate as long as average revenue exceeds marginal cost.
• D)continue to operate as long as average revenue exceeds average fixed cost.

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Definitions:

Neoliberalism

An economic and political ideology favoring free-market capitalism, deregulation, and reduction in government spending on social services.

Social Decisions

Decisions made within a group or society that affect the welfare of the community and involve considerations beyond individual gain.

Ethical Principles

Fundamental guidelines that dictate behavior and conduct, often used to guide actions in professional and personal settings to ensure fairness, integrity, and respect.

Social Contract Ethical Theory

A theory in philosophy that posits the legitimacy of authority of the state over the individual is grounded in a contractual agreement among individuals in a society.