MrsSmith Is Operating a Firm in a Competitive Market

question 202

Multiple Choice

Mrs.Smith is operating a firm in a competitive market.The market price is $6.50. At her profit-maximizing level of output,her average total cost of production is $7.00 and her average variable cost of production is $6.00.

• A)Mrs.Smith is earning a loss and should shutdown in the short run.
• B)Mrs.Smith is earning a loss but should continue to operate in the short run.
• C)Mrs.Smith is earning a profit since the price is above the average variable cost.
• D)Without knowing Mrs.Smith's marginal cost we cannot determine whether she should stay in business or shut down.

---

Definitions:

Sentences

Grammatically complete sequences of words conveying thoughts, statements, questions, or commands.

Comprehend

To grasp or understand the meaning of something thoroughly.

Vet

A professional who practices veterinary medicine, treating diseases, disorders, and injuries in animals.

Christmas Presents

Gifts or items given to others during the Christmas holiday as a sign of affection, goodwill, or celebration.