Suppose the Price of an Item in a Perfectly Competitive

question 291

Multiple Choice

Suppose the price of an item in a perfectly competitive market is $3. For a firm in this market, MC = MR at an output of 100 units. The average total cost at this output level is $4 per unit, and TVC is $80. We may conclude that

• A) the firm should shut down because TC > TR.
• B) the firm should continue to produce because P>AVC.
• C) the firm should shut down because its TFC is $320 and its TC is $400.
• D) the firm should shut down because other firms will enter the industry as the market is perfectly competitive.

---

Definitions:

Organizational Resources

Assets, including human, financial, physical, and informational, that an organization possesses and can utilize to execute its strategies and achieve its objectives.

Opportunity Power

The ability to influence people or situations through the creation or control of opportunities.

Politically Correct

Language or behavior that is designed to avoid offense or disadvantage to members of particular groups in society.

Office Politics

The use of power and social networking within an organization to achieve changes that benefit the organization or individuals within it.