If a Firm's Minimum Point on the ATC Curve Is

question 171

Multiple Choice

If a firm's minimum point on the ATC curve is $15 and on the AVC curve is $10, what is the firm's optimal strategy in the short run if the market price is $12 and it is producing where MR = MC?

• A) The firm should shut down immediately because it is losing money.
• B) The firm should increase production to reduce costs in the short run.
• C) The firm should continue producing where MR = MC to limit its losses.
• D) The firm should decrease production in order to reduce short-term production costs.

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Definitions:

Positioning

The process of establishing a brand or product in the mind of customers relative to competitors’ offerings.

Mental Image

A representation of sensory experiences created in the mind, not immediately present to the senses.

Marketing Support

Services or activities provided to assist in the planning, development, and execution of marketing strategies and campaigns.

Product Pullout

The process of removing a product from the market or discontinuing its sale, often due to poor performance, safety concerns, or changing market conditions.