Which of the Following Statements Best Reflects the Production Decision

question 73

Multiple Choice

Which of the following statements best reflects the production decision of a profit-maximizing firm in a competitive price-taker market 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 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:

Future Forecast

Predictions about future events or trends, often based on current data and analysis.

Human Resource Planning

The process by which an organization ensures that it has the right number and kind of people, at the right place, at the right time, capable of effectively and efficiently completing tasks that will help the organization achieve its overall strategic objectives.

Strategic Human Resource Management

A proactive approach to managing a company's employees aimed at aligning HR strategies with business objectives to gain a competitive advantage.

Human Resource Supply Techniques

Refers to the strategies and methods used by organizations to meet their current and future human resource needs.