If the Price Is Consistently Below Average Total Cost, Then

question 84

Multiple Choice

If the price is consistently below average total cost, then in the short run a perfectly competitive firm should:

• A) shut down.
• B) continue to produce to minimize losses.
• C) raise the price.
• D) There is not enough information given to answer this question.

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Definitions:

Inward

Refers to movements or directions towards the inside or center of something.

Expansionary Gap

A situation where the actual output of an economy exceeds its potential output at full employment, often leading to inflation.

Inflationary Pressure

The upward pressure on prices that may arise from factors such as increased demand or rising costs, leading to inflation.

Seasonal Unemployment

Unemployment resulting from seasonal variations in demand or supply of labor, often seen in industries like agriculture or tourism.