Suppose the Minimum Average Total Cost (ATC) of a Firm

question 80

Multiple Choice

Suppose the minimum average total cost (ATC) of a firm competing in a competitive price-taker market was $1.00 per unit and that the firm's minimum average variable cost (AVC) was $.80 per unit. If the market price was $.75 per unit, a profit-seeking firm would

• A) shut down immediately.
• B) produce where MR = MC in the short run.
• C) shut down in the long run but remain in business in the short run.
• D) do both b and c.

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Definitions:

Plausible

An adjective describing something that appears to be reasonable or probable, making it worthy of belief or acceptance.

Hypnosis

is a trance-like state of focused attention and enhanced suggestibility, often used for therapeutic purposes to access subconscious thoughts and behaviors.

Vivid

This term describes perceptions, images, or memories that are strikingly clear, detailed, and intense, making them easily remembered or hard to ignore.

Constructive Processing

The active process of creating meaningful interpretations and understandings of experience through integrating new information with existing knowledge.