If a Competitive Firm Finds That It Maximizes Short-Run Profits

question 3

Multiple Choice

If a competitive firm finds that it maximizes short-run profits by shutting down,which of the following must be TRUE?

• A) p < AVC for all levels of output.
• B) p < AVC only for the level of output at which p = MC.
• C) p < AVC only if the firm has no fixed costs.
• D) The firm will earn zero profit.

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Definitions:

Bronchi

The main passageways directly attached to the trachea that carry air in and out of the lungs.

Pneumothorax

A medical condition where air enters the space between the lung and chest wall, causing the lung to collapse.

Pneumonitis

Inflammation of lung tissue that is not caused by infection.

-osis

A suffix used in medical terminology to denote a condition, disease, or increase.