Suppose a Profit-Maximizing Firm in a Competitive Market Produces Rubber

question 551

Multiple Choice

Suppose a profit-maximizing firm in a competitive market produces rubber bands. When the market price for rubber bands falls below the minimum of its average total cost, but still lies above the minimum of average variable cost, in the short run the firm will

• A)experience losses but will continue to produce rubber bands.
• B)shut down.
• C)earn both economic and accounting profits.
• D)raise the price of its product.

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Definitions:

Tokens

Symbols or objects used to represent or signify something else, or in behavioral economics, a tangible reward used in token economy systems for reinforcing desired behaviors.

Crespi

Crespi is likely a reference to an individual or specific study within psychological or scientific research, but without additional context, it's unclear which Crespi or study is being referred to.

Reinforcement

A process in which a behavior is strengthened by the outcomes that follow, leading to an increase in the likelihood of that behavior occurring in the future.

Running Speed

is the rate at which an individual or object moves across a distance, commonly measured in units of distance per time, such as meters per second.