If Average Total Cost > Average Variable Cost > Price

question 1

Multiple Choice

If average total cost > average variable cost > price, a profit maximizing firm in a perfectly competitive market should

• A) continue to produce its current output level.
• B) shut down in the short run.
• C) increase its output level to minimize its loss.
• D) none of the above

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Definitions:

Rescinding

The action of revoking, canceling, or repealing a contract, agreement, or law.

Respondeat Superior Liability

A legal doctrine holding employers or principals liable for the wrongful acts of their employees or agents, performed within the scope of their employment or agency.

Principal

The original amount of money borrowed or invested, excluding any interest or dividends.

Fault

In legal terms, refers to culpability or responsibility for wrongdoing or an accident, often determining liability in civil cases.