Mrs Smith Operates a Business in a Competitive Market

question 567

Multiple Choice

Mrs. Smith operates a business in a competitive market. The current market price is $8.50. At her profit-maximizing level of production, the average variable cost is $8.00, and the average total cost is $8.25. Mrs. Smith should

• A)shut down her business in the short run but continue to operate in the long run.
• B)continue to operate in the short run but shut down in the long run.
• C)continue to operate in both the short run and long run.
• D)shut down in both the short run and long run.

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Definitions:

Number of Times in Prison

A count of the instances an individual has been incarcerated.

Y-Intercept

The point where a line or curve intersects the y-axis on a graph.

Linear Regression Equation

A mathematical equation used to predict the value of a dependent variable based on one or more independent variables, assuming a linear relationship.

Pearson r

A measure of the linear correlation between two variables, ranging from -1 to 1, where 1 means a perfect positive linear relationship, -1 a perfect negative linear relationship, and 0 no linear relationship.