Say a Competitive Firm Is Producing at Point Where ATC

question 8

Multiple Choice

Say a competitive firm is producing at point where ATC = $10, AVC = $2. If the firm charges $5 for its output, then in the short-run this firm should

• A)shutdown production.
• B)exit the industry.
• C)continue to operate.
• D)try to reduce its fixed costs.

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Definitions:

Mechanic's Lien

A security interest in the title to property for the benefit of those who have supplied labor or materials that improve the property.

Artisan's Lien

A legal claim granted to craftsmen or laborers on property they have worked on or materials they have supplied, to ensure payment for their services.

Property

Assets or possessions owned by an individual or entity, encompassing both tangible and intangible goods.

Mechanic's Lien

A legal claim against a property by a contractor or worker, for unpaid labor or materials provided for the property's improvement.