In the Short Run, If a Firm's Price Is Greater

question 76

Multiple Choice

In the short run, if a firm's price is greater than its AVC but less than its ATC, the firm should:

• A)shut down immediately because it is generating an economic loss.
• B)shut down temporarily because it is generating an economic loss.
• C)continue operating at the same level of output because it is generating an economic profit.
• D)continue operating even though it is generating an economic loss.
• E)increase its output in order to earn more profits.

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Definitions:

Cost Formulas

Equations used to calculate and anticipate the costs associated with manufacturing a product or providing a service, often considering variables such as materials, labor, and overhead.

Performance Reports

Documents that compare budgeted or planned performance against actual performance.

Spending Variance

The difference between the actual amount spent and the budgeted amount, often analyzed in budgeting and cost management.

Plane Operating Costs

are expenses related to operating aircraft, including fuel, maintenance, crew salaries, and airport fees.