Suppose a Profit-Maximising Firm in a Competitive Market Is Unable

question 45

Multiple Choice

Suppose a profit-maximising firm in a competitive market is unable to generate enough revenue to pay all of its fixed costs.In the short run it should:

• A)shut down and incur the total loss of its fixed cost
• B)continue to produce as long as marginal cost is less than average revenue
• C)continue to produce as long as revenue is sufficient to pay variable costs
• D)continue to produce and lower its price to gain more market share

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Definitions:

Predictive Validity

How well a score from a test or scale indicates anticipated performance in tasks or outcomes that are related.

IQ Test

A standardized assessment used to measure human intelligence and cognitive abilities in relation to an age-group norm.

Correlation

A statistical measure that indicates the extent to which two or more variables fluctuate together, showing the strength and direction of a relationship.

Reliability

The consistency and stability of test scores or measurements over time or across different occasions.