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:

Coefficient Of Determination

A statistical measure, often denoted as R², that represents the proportion of the variance for a dependent variable that's explained by an independent variable or variables in a regression model.

Independent Variables

Elements in research or a scenario that are altered or sorted to explore their influence on response variables.

Regression Equation

An equation that expresses the linear relationship between one or more independent variables and a dependent variable.

Variation

The measure of dispersion within a dataset, indicating how much individual data points differ from the average value.