Which Production Decision Is a Profit-Maximizing Firm in a Competitive

question 214

Multiple Choice

Which production decision is a profit-maximizing firm in a competitive market most likely to take when price falls below the minimum of average variable cost

• A)The firm will continue to produce to attempt to pay fixed costs.
• B)The firm will immediately stop production to minimize its losses.
• C)The firm will stop production as soon as it is able to pay its sunk costs.
• D)The firm will continue to produce in the short run but will likely exit the market in the long run.

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Definitions:

Supportiveness

The quality of providing encouragement, assistance, and comfort to others, fostering a positive environment.

People Person

A term used to describe someone who enjoys and is particularly good at interacting with others.

Drive

An inner urge that motivates individuals to accomplish goals, often influenced by biological, psychological, and societal factors.

Motivation

The reason or reasons one has for acting or behaving in a particular way; in a work context, it often refers to the factors that drive employees to achieve business objectives.