When Price Is Less Than Average Variable Cost at the Profit-Maximizing

question 4

Multiple Choice

When price is less than average variable cost at the profit-maximizing level of output,a firm should:

• A)continue to produce the level of output at which marginal revenue equals marginal cost if it is operating in the short run.
• B)continue to produce the level of output at which marginal revenue equals marginal cost if it is operating in the long run.
• C)shutdown, because it will lose nothing in that case.
• D)shutdown, because it cannot even cover all of its variable costs let alone its fixed costs if it stays in business.

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Definitions:

Compassion

A profound understanding of and compassion for someone else's pain, paired with a wish to mitigate their distress.

Heart

Often metaphorically used to refer to the emotional or moral core of an individual or their capacity for empathy and love.

Relationship

A connection, association, or involvement between two or more parties, individuals, or entities.

Self-Discipline

The ability to control one's feelings and overcome one's weaknesses; the ability to pursue what one thinks is right despite temptations to abandon it.