Which of the Following Statements Best Reflects the Production Decision

question 9

Multiple Choice

Which of the following statements best reflects the production decision of a profit-maximising firm in a competitive market when price falls below the minimum of average variable cost?

• A) the firm will immediately stop production to minimise its losses
• B) the firm will continue to produce to attempt to pay fixed costs
• C) the firm will stop production as soon as it is able to pay its sunk costs
• D) the firm will continue to produce in the short run, but will exit the in the long run

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Definitions:

U.S. Bureau of Census

A principal agency of the U.S. Federal Statistical System responsible for collecting and analyzing data related to the population, economy, and society of the United States.

Income Inequality

The unequal distribution of income within a population, often measured using various statistical methods to highlight disparities between the richest and poorest segments.

Income Inequality

Refers to the uneven distribution of income and wealth across the various participants in an economy.

Top Quintile

The highest twenty percent segment of a population sorted by income or other measurable criteria.