Which of the Following Best Describes Why a Perfectly Competitive

question 119

Multiple Choice

Which of the following best describes why a perfectly competitive firm will sometimes continue producing in the short run even if it incurs a loss?

• A) As long as price exceeds average variable cost, the loss from producing will be smaller than the loss from shutting down, which is equal to the amount of total fixed costs.
• B) Short-run losses turn into long-run profits when there is entry into the market.
• C) A perfectly competitive firm should never produce if it incurs a loss because it is unable to influence the market price.
• D) If price exceeds average total cost, the loss from covering the fixed costs will be smaller than the loss from covering the variable costs.

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Definitions:

Combining Forms

In medical terminology, the word root with a combining form vowel (usually an “o”) that aids in making the word pronounceable, particularly when adding a suffix that begins with a consonant.

Singular

Unique or existing as the only one; often used to describe something that is remarkable.

Plural

The form of a word that is used to denote more than one.

Cardiomyopathy

A group of diseases that affect the heart muscle, often leading to heart failure and other complications.