At a Firm's Profit-Maximizing Level of Output, Its Price Is

question 219

Multiple Choice

At a firm's profit-maximizing level of output, its price is $200 and its short-run average total cost is $225. The firm

• A) has a profit of $25 per unit of output.
• B) should shut down if its short-run average fixed cost is less than $25.
• C) has a loss of $100 per unit of output.
• D) should shut down if its short-run average variable cost exceeds $25.

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Definitions:

Price of Soybeans

The current market value at which soybeans can be bought or sold.

Normative Statement

Assertions or opinions that express what ought to be, involving value judgments and cannot be tested or verified.

Positive Statement

An objective statement based on factual information that can be tested and validated, often used in economics to describe what is happening without judgment of desirability.

Tax on Beer

A specific tax imposed on the sale of beer, generating revenue for the government and sometimes used to discourage excessive consumption.