A Profit-Maximizing Firm Should Shut Down in the Short Run

question 118

Multiple Choice

A profit-maximizing firm should shut down in the short run if the average revenue it receives is less than

• A) average variable cost.
• B) average total cost.
• C) average fixed cost.
• D) marginal cost.

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Definitions:

Fireproof

A property or material that is resistant to or capable of withstanding damage from fire.

Insured

The individual or entity covered under an insurance policy and protected against specified risks or losses.

Just-In-Time

A management strategy that aligns raw-material orders from suppliers directly with production schedules to reduce inventory costs.

Insurable Interest

A stake or a legal right in the preservation of an item, person, or property that allows an individual or entity to obtain insurance coverage against loss or damage.