If a Firm's Average Total Cost Is Less Than Price

question 78

Multiple Choice

If a firm's average total cost is less than price where MR = MC

• A)the firm should shut down.
• B)the firm should raise its price.
• C)the firm should continue to produce the output it is producing.
• D)the firm should cut back on its output to lower its cost.

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Definitions:

New Ventures

Businesses or projects initiated by entrepreneurs, often characterized by innovation, high risks, and high rewards.

Opportunity Costs

The cost of forgoing the next best alternative when making a decision, representing the benefits one could have received by taking an alternative action.

Sunk Costs

Expenses that have been spent and cannot be retrieved.

Cash Flow Estimation

This refers to the process of forecasting and evaluating the amount of cash that is expected to flow into and out of a business over a specific period.