If the Price of a Product Falls Below Average Total

question 107

Multiple Choice

If the price of a product falls below average total cost in the short run, the firm:

• A) has an economic profit.
• B) cannot cover total fixed costs.
• C) experiences a loss.
• D) must always shut down.
• E) should expand output until MC = MR.

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Definitions:

Materially Altered

A change in a document or agreement that significantly affects its terms or conditions.

Holder In Due Course

A legal term for a person who has acquired a negotiable instrument in good faith and for value, and thus is protected against certain defenses and claims that could be raised against the original payee.

Payee

The party in a transaction who receives the payment.

Properly Delivered

Pertains to goods or documents being conveyed to the correct recipient in good condition and within the agreed timeframe.