If the Market Price Falls Below a Firm's Minimum Average

question 133

Multiple Choice

If the market price falls below a firm's minimum average total cost,the firm should:

• A) definitely stop production.
• B) definitely continue to operate at a loss.
• C) consider how to minimize its losses.
• D) pay only fixed costs.

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Definitions:

Matching

An accounting principle that requires expenses to be matched with the revenues generated in the same period, ensuring accurate earnings measurement.