Suppose Tim's Cowboy Boot Factory Produces in a Perfectly Competitive

question 195

Multiple Choice

Suppose Tim's Cowboy boot factory produces in a perfectly competitive market. Suppose the average total cost of cowboy boots is $65, the average variable cost of cowboy boots is $60, and the price of cowboy boots is $62. If the firm is producing the level of output where marginal cost equals price, then in the short run the firm

• A) should shut down.
• B) should continue to produce since total revenue exceeds total variable cost.
• C) is earning a positive economic profit.
• D) can increase profit by increasing output.

---

Definitions:

Number of Treatments

The total count of distinct experimental conditions applied in research to assess their effects on outcomes.

MSB

Marginal Social Benefit; the additional benefit to society from one more unit of a good or service being produced and consumed.

SS(Total)

The total sum of squares in regression analysis, representing the total variation in the dependent variable.

Average Wear

The typical amount of degradation or use that an item undergoes over a given period.