A Profit-Maximizing Firm Will Shut Down in the Short Run

question 391

Multiple Choice

A profit-maximizing firm will shut down in the short run when

• A)price is less than average variable cost.
• B)price is less than average total cost.
• C)average revenue is greater than marginal cost.
• D)average revenue is greater than average fixed cost.

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Definitions:

Domestic Price

The price of goods or services within a country, unaffected by international market prices or exchange rates.

World Price

The global market price of a commodity, determined by supply and demand in the international market.

Tariff

A tax imposed by a government on goods and services imported into a country, typically used to protect domestic industries.

Imported

Goods or services brought into a country from abroad for sale, contrasting with domestic products or services.