If a Firm Decides to Make the Investment Decision to Expand

question 32

Multiple Choice

If a firm decides to make the investment decision to expand its capacity,then it must have discovered that

• A)P = ATC.
• B)P > AVC.
• C)P > ATC.
• D)P = AVC.

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Definitions:

Going Prices

Refers to the current prices at which goods or services are being sold in the market.

Net Demander

An entity or individual that consumes or requires more of a good or service than they produce or provide.

Inferior Good

A type of good for which demand decreases as the income of the consumer increases, contrary to what happens with a normal good.

Net Supplier

An entity that provides more of a good or service to the market than it consumes from it.