If Price Is Above Average Variable Cost and Below Average

question 143

Multiple Choice

If price is above average variable cost and below average total cost, a profit-maximizing price taker should

• A) immediately shut down; failing to do so is contrary to the idea of profit maximization in a competitive market.
• B) continue producing as long as it expects the market price to rise above average total cost in the near future.
• C) attempt to push price upward by slowly reducing output.
• D) cut price so more units can be sold.

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Definitions:

Hormone Supplements

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Binary System

In computing, a system that represents data using two discrete states, typically 0 and 1, which are the foundation of digital systems.

Binary Categorization

The classification of objects, concepts, or people into two distinct groups or categories, often ignoring the existence of a spectrum.

Behaviors

Observable actions or reactions of individuals, often in response to the external environment or internal stimuli.