If the Price Is Less Than the Average Variable Cost

question 282

Multiple Choice

If the price is less than the average variable cost at the quantity of output where MR = MC,in the short run a perfectly competitive firm will:

• A)produce at a loss.
• B)produce at a profit.
• C)shut down production.
• D)produce more than the profit-maximizing quantity.

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Definitions:

Asset (A)

Resources owned by a company that have economic value and can provide future benefits.

Liability (L)

Financial obligations, debts, or responsibilities the company owes to others, measurable in monetary terms.

Statement of Stockholders' Equity

A financial document that shows changes in the value of a company's equity over a specific period, including investments by shareholders and retained earnings.