Which of the Following Statements Best Reflects the Production Decision

question 356

Multiple Choice

Which of the following statements best reflects the production decision of a profit-maximizing firm in a competitive market when price falls below the minimum of average variable cost?

• A)The firm will continue to produce to attempt to pay fixed costs.
• B)The firm will immediately stop production to minimize its losses.
• C)The firm will stop production as soon as it is able to pay its sunk costs.
• D)The firm will continue to produce in the short run but will likely exit the market in the long run.

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Definitions:

Terror Management Theory

A social psychology concept suggesting humans have anxiety about death, leading us to seek symbolic or actual immortality through our cultures and self-esteem.

Hierarchy Of Goals

The idea that goals are organized hierarchically from very abstract goals to very concrete goals, with the latter serving the former.

Self-Direction

The ability to set one's own goals and make decisions independently, guiding one's own life path.

Cultural Worldview

The collective belief systems, values, and norms shared by a particular group of people that shape their understanding of the world around them.