Consider the Following Data: Equilibrium Price = $40, Quantity of Output

question 89

Multiple Choice

Consider the following data: equilibrium price = $40, quantity of output produced = 100 units, average total cost = $47, and average variable cost = $37. What should the firm do and why?

• A)Shut down in the short run, because it is taking a loss of $700.
• B)Continue to produce in the short run, because price is greater than average variable cost.
• C)Shut down in the short run, because average variable cost is less than average total cost.
• D)Continue to produce in the short run, because firms are always stuck with having to produce in the short run.

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Definitions:

Amicable Discharge

A mutual agreement between an employer and an employee to end employment on good terms.

Employee Engagement

The degree to which employees are fully involved in their work and the strength of their commitment to their job and company.

Competitive Advantage

A unique attribute or ability a company has that enables it to outperform its competitors in the market.

Self-Evaluations

The process by which individuals assess their own job performance, strengths, and areas needing improvement, often part of performance management systems.