If the Price of a Product Falls Below Average Total

question 121

Multiple Choice

If the price of a product falls below average total cost in the short run, the firm:

• A) has an economic profit.
• B) cannot cover total fixed costs.
• C) experiences a loss.
• D) must always shut down.

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Definitions:

Wage

The price paid for the use or services of labor per unit of time.

Demand Schedule

A table that shows the quantity of a good or service that consumers are willing to buy at various prices.

Labor Services

The physical and mental efforts that people contribute to the production of goods and services.

Technology Changes

The process of innovation and the adoption of new or improved technologies and systems.