When the Marginal Cost of a Price-Taking Firm Is Less

question 23

Multiple Choice

When the marginal cost of a price-taking firm is less than the market price of its product, what action should the firm take?

• A) charge more than the market price
• B) expand output (provided that price is not less than average variable cost)
• C) reduce output (provided that price is not less than average variable cost)
• D) maintain output (provided that price is not less than average variable cost)

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Definitions:

Median Income

The middle value of a set of incomes, dividing the income distribution into two equal groups, with half earning more and half earning less.

Chapter 7

A provision under the U.S. Bankruptcy Code involving the liquidation of a debtor's property to pay off creditors.

Creditors' Meeting

A gathering during bankruptcy proceedings where creditors can question the debtor under oath regarding their finances and the bankruptcy petition.

Liquidation Schedule

A plan or timetable for selling off assets, typically used in the context of dissolving a business or paying off debt.