If Average Fixed Cost Exceeds Average Variable Cost,a Firm Should

question 29

True/False

If average fixed cost exceeds average variable cost,a firm should shut down in the short run.

---

Definitions:

Unitary Elasticity

A situation in economics when a change in the price of a product leads to an equal proportionate change in the quantity demanded or supplied.

Marginal Revenue

The additional income received from selling one more unit of a good or service; it is an important concept for determining the optimal level of output for a company.

Purely Competitive Firm

A company operating in a market where there are many buyers and sellers, the products are homogeneous, and there are no barriers to entry or exit.

Average Revenue

The revenue a company generates per unit of output sold, calculated by dividing total revenue by the number of units sold.