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:

Adequate Employment

Adequate employment refers to employment situations where individuals have jobs that sufficiently utilize their skills, offer fair compensation, and provide stable working conditions.

Poverty

The state of having insufficient financial resources to meet basic living expenses, such as food, shelter, and healthcare.

Poverty Threshold

The annual income below which a family is officially considered poor.

Technological Progress

It denotes advancements and improvements in technology, which enhance productivity and efficiency in various sectors.