Assume a Firm Has the Following Cost and Revenue Characteristics

question 10

Multiple Choice

Assume a firm has the following cost and revenue characteristics at its current level of output: price=$8.00,average variable cost=$6.00 and average fixed cost =$4.00.In the long run,the firm

• A)Should shut-down as its making a loss of $2
• B)Should continue operating as long as it is covering the variable costs of $6
• C)Should continue operating as long as it is covering the fixed costs of $4
• D)Should not shut down

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Definitions:

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