Assume for a Competitive Firm That MC = AVC at $12

question 165

Multiple Choice

Assume for a competitive firm that MC = AVC at $12, MC = ATC at $20, and MC = MR at $16. This firm will

• A) realize a profit of $4 per unit of output.
• B) maximize its profit by producing in the short run.
• C) minimize its losses by producing in the short run.
• D) shut down in the short run.

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Definitions:

Equilibrium Quantity

The amount of a good or service that is supplied and demanded at the equilibrium market price.

Marginal Product

The additional output resulting from the use of one more unit of a factor of production.

Computer Programmers

Professionals skilled in writing and testing the code that enables software applications to function according to user or system design specifications.

Labor Demand Curve

A graphical representation showing the relationship between the quantity of labor demanded by employers and the wage rate.