When a Perfectly Competitive Firm Makes a Decision to Shut

question 258

Multiple Choice

When a perfectly competitive firm makes a decision to shut down,which is most likely

• A)Marginal cost is above average variable cost.
• B)Marginal cost is above average total cost.
• C)Price is below the minimum of average variable cost.
• D)Fixed costs exceed variable costs.

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Definitions:

Operation of Law

A way in which rights or liabilities are automatically transferred or changed due to existing legal rules, rather than the action of the parties.

Implied Warranty

An unwritten and unspoken guarantee that a product or service will meet a minimum level of quality and will perform as expected, even though it is not explicitly stated in a contract.

Merchantability

A warranty that goods sold will meet a minimum level of quality and will be fit for the purpose for which they are sold.

Implied Warranty

A legal assurance that goods or services meet a minimum level of quality, irrespective of whether it has been explicitly stated.