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:

Illogical Thinking Process

A pattern of thought characterized by conclusions and reasoning that are not consistent with logical principles, often manifesting in various cognitive distortions.

Psychodynamic

A clinical approach focusing on the influence of the unconscious mind on behavior, highlighting internal conflicts and past experiences.

Behavioral-focused

Emphasizes changing behaviors through various psychological strategies and interventions, focusing on observable actions.

Existential

Relating to or based on human existence, especially its inherent meaning, challenges, and the individual's freedom to make choices.