When Price Is Below Average Variable Cost, a Firm in a Competitive

question 451

Multiple Choice

When price is below average variable cost, a firm in a competitive market will

• A)shut down and incur fixed costs.
• B)shut down and incur both variable and fixed costs.
• C)continue to operate as long as average revenue exceeds marginal cost.
• D)continue to operate as long as average revenue exceeds average fixed cost.

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Definitions:

Longitudinal

An approach to research that involves repeated observations of the same variables over short or long periods of time to detect changes.

Experimental

describes a research methodology involving the manipulation of variables to test a hypothesis in a controlled environment.

Sequential

Relating to or forming a sequence, where items are ordered according to a logical or natural progression.

Scientific Method

A systematic approach to investigating phenomena, acquiring new knowledge, or correcting and integrating previous knowledge.