When Price Exceeds Average Variable Cost in the Short Run

question 558

Multiple Choice

When price exceeds average variable cost in the short run, a competitive firm's marginal cost curve is regarded as its supply curve because

• A)the position of the marginal cost curve determines the price for which the firm should sell its product.
• B)among the various cost curves, the marginal cost curve is the only one that slopes upward.
• C)the marginal cost curve determines the quantity of output the firm is willing to supply at any price.
• D)the firm is aware that marginal revenue must exceed marginal cost in order for profit to be maximized.

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Definitions:

CPI

Consumer Price Index, a measure that examines the weighted average of prices of a basket of consumer goods and services, such as transportation, food, and medical care.

Commerce Department

A department within a government responsible for regulating, promoting, and facilitating trade and commerce activities.

CPI

Consumer Price Index, a measure that examines the weighted average of prices of a basket of consumer goods and services, often used as an indicator of inflation.

CPI

Stands for Consumer Price Index, a measure that examines the weighted average of prices of a basket of consumer goods and services, such as transportation, food, and medical care.