For a Particular Competitive Firm, the Minimum Value of Average

question 446

Multiple Choice

For a particular competitive firm, the minimum value of average variable cost (AVC) is $12 and is reached when 200 units of output are produced. For the same firm, the minimum value of average total cost (ATC) is $15 and is reached when 230 units of output are produced. Which of the following statements is correct?

• A)In the short run, the firm will shut down if the price of its product is $11.
• B)In the long run, the firm will shut down if the price of its product is $14.
• C)If the price of its product is $12, then the firm's loss if it produces 200 units of output is the same as its loss if it shuts down.
• D)All of the above are correct.

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Definitions:

Balanced Scorecard

A system for planning and managing strategy that ensures business processes are in harmony with the organization's goals and vision, facilitates better communication within and outside the organization, and assesses how well the organization is achieving its strategic objectives.

Strategic Objective

A planned goal that an organization strives to achieve to guide its long-term plans and align its resources.

Performance Metrics

Quantitative measures used to evaluate, compare, and track performance or production across different periods or against specific objectives.

Performance Targets

Specific goals set by a company or individual to measure progress and achievement over a period.