If, at the Point Where MR = MC, the Firm

question 182

Multiple Choice

If, at the point where MR = MC, the firm incurs losses, in the short run the firm should:

• A) shut down.
• B) increase output.
• C) decrease output.
• D) continue at its current output if P > AVC.
• E) continue at its current output if P > ATC.

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Definitions:

Economic Recession

A period of temporary economic decline during which trade and industrial activities are reduced, generally identified by a fall in GDP in two successive quarters.

Inflation

The rate at which the general level of prices for goods and services is rising, and subsequently, purchasing power is falling.

Random Variation

The variability in data that arises due to chance and cannot be attributed to any specific cause or pattern.

Stock Market Prices

The current price at which shares of a company are bought and sold in the stock market.