The Following Questions Are Based on the Key Below

question 165

Multiple Choice

The following questions are based on the key below.Assume that you are given cost and price data for a number of competitive firms at their present output levels.In all cases the marginal cost is increasing.With this information,indicate whether each firm should,in the short run:
1.produce more
2.produce less.
3.shut down
4.cannot be determined from the information.
-Refer to the information above to answer this question.If the price exceeds the firm's marginal cost and is above its average variable costs,what should the firm do?

• A)1.
• B)2.
• C)3.
• D)4.

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Definitions:

Interest Rates

The percentage of a loan charged as interest to the borrower, typically expressed as an annual percentage rate.

Consumption

The total amount of goods and services bought and used by consumers, representing a major component of GDP and economic activity.

APC

The fraction of income that is spent on consuming goods and services is known as the Average Propensity to Consume.

APS

Stands for Aggregate Planning Strategies, techniques used in business to match supply and demand by adjusting production rates, labor levels, and inventory.