Suppose the Price of a Product Is Less Than Its

question 124

Multiple Choice

Suppose the price of a product is less than its average variable cost. When the firm's fixed obligations are completely ended, it will now most likely:

• A) make an economic profit.
• B) go out of business.
• C) expand to a bigger operation.
• D) break even.

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Definitions:

Quantity Supplied

The total amount of a good or service that producers are willing and able to sell at a given price over a specific period.

Alter

To change, modify, or adjust.

Quantity Supplied

The capacity of goods or services that producers are inclined and qualified to vend at an identified price for a designated span of time.

Price Rises

An increase in the cost of goods or services over time, often referred to as inflation.