Firms Will Always Stay in the Market in the Short

question 138

Multiple Choice

Firms will always stay in the market in the short run if the price they charge is

• A) less than their minimum average total cost (ATC).
• B) less than their minimum average variable cost (AVC).
• C) greater than their minimum average variable cost (AVC).
• D) greater than their minimum average total cost (ATC)but not greater than their minimum average variable cost (AVC).
• E) equal to their minimum average variable cost (AVC).

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Definitions:

Independently Acting Buyers

are consumers who make purchasing decisions based on their own preferences and circumstances, without coordinating with others.

Freedom to Enter

The condition in a market where new firms can enter the industry without facing prohibitive barriers or regulations.

Opportunity Costs

The cost of forgoing the next best alternative when making a decision or choosing between options.

Diminishing Marginal Utility

The principle that as a consumer consumes more of a good or service, the additional satisfaction gained from each additional unit decreases.