If Market Price Is Greater Than the Minimum of AVC

question 89

Multiple Choice

If market price is greater than the minimum of AVC but below the minimum of AC, then

• A)the firm will shut down.
• B)revenue covers variable costs and some of the fixed costs and profit is positive.
• C)revenue covers variable costs and some of the fixed costs, although profit is negative.
• D)economic profit is zero.

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Definitions:

Depository Institution

A financial institution that accepts deposits from individuals and provides loan services.

Investment Bank

A financial institution that provides advisory services, financing, and investment services to individuals, corporations, and governments.

Short-term Debt Securities

Financial instruments that represent borrowed funds which must be repaid within a short time frame, typically less than one year.

Money Markets

Financial markets for short-term borrowing and lending, dealing with assets that have high liquidity and short maturities.