If a Competitive Firm Finds That It Maximizes Short-Run Profits

question 37

Multiple Choice

If a competitive firm finds that it maximizes short-run profits by shutting down,which of the following must be true?

• A) p < AVC for all levels of output.
• B) p < AVC only for the level of output at which p = MC.
• C) p < AVC only if the firm has no fixed costs.
• D) The firm will earn zero profit.

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Definitions:

Depth Perception

The visual ability to perceive the world in three dimensions, enabling the estimation of distances.

Two-dimensional

Pertaining to something having both length and width but no depth, or pertaining to analysis or representation on a plane or flat surface.

Binocular Disparity

The difference in the images received by the two eyes due to their different positions, which contributes to the perception of depth.

Depth Cue

Depth cue refers to the visual cues that allow individuals to perceive the distance or three-dimensionality of an object or scene.