Baseball Teams Shut Down in the Winter

question 114

Multiple Choice

Baseball teams shut down in the winter.This is an example of

• A) permanently leaving the industry because price is less than average fixed cost.
• B) temporarily leaving the industry because price is less than average variable cost.
• C) temporarily leaving the industry because price is less than average fixed cost.
• D) permanently leaving the industry because price is less than average variable cost.

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Definitions:

Long-Run Profits

Profits that a firm anticipates it can maintain over a lengthy period by adapting its production and costs.

Economic Profits

The profit a company makes after deducting both its explicit and implicit costs, differing from accounting profits.

Marginal Costs

The price increase associated with the creation of an extra unit of a product or service.

Average Total Costs

The total costs of production (fixed and variable costs combined) divided by the quantity of output produced.