If a Firm in Circumstances of Perfect Competition Finds That

question 41

Multiple Choice

If a firm in circumstances of perfect competition finds that, at its best possible operating position, total revenue is not sufficient to cover total variable costs, it should:

• A)plan to shut down, even in the short run.
• B)plan to continue operating permanently.
• C)continue to operate if, at this same level of output, price per unit is sufficient to cover average cost.
• D)increase the price it is charging.
• E)decrease the price it is charging.

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Definitions:

F-test

A statistical test used to compare two population variances and determine if they are significantly different.

T-test

A statistical analysis method that contrasts the average values of two groups to ascertain if their difference is statistically significant.

Analysis of Variance (ANOVA)

A statistical method used to compare the means of three or more samples to find out if at least one of the sample means is different from the others.

Sum Squares Error (SSE)

A statistical measure used to determine the variance or deviation of observed values from the true values, often used in the context of linear regression analysis.