ABC Company Will Choose to Shut Down Rather Than Operate

question 111

Multiple Choice

ABC company will choose to shut down rather than operate as long as

• A) it earns the same amount as its expenses.
• B) average fixed cost is less than average variable cost.
• C) total revenue is less than or equal to fixed cost.
• D) total revenue is less than or equal to variable cost.

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Definitions:

Inverse Demand Function

A mathematical function that expresses price as a function of quantity demanded, illustrating how the price necessary to sell a given quantity changes.

Price

The amount of money required to purchase a good or service, often determined by supply and demand dynamics in the market.

Income

Funds accumulated over time from work or investing efforts, usually received systematically.

Utility Function

A representation in economics of how a consumer ranks different bundles of goods according to their level of satisfaction or happiness.