In Which Market Structure Will a Firm Choose Not to Shut

question 124

Multiple Choice

In which market structure will a firm choose not to shut down when price is less than average variable cost?

• A) perfect competition
• B) monopoly
• C) monopolistic competition
• D) All of the above. Any firms will shut down when P < AVC.

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Definitions:

Disposable Income

Disposable income is the amount of money individuals or households have available for spending and saving after income taxes have been accounted for.

Disposable Income

The amount of money that households have available for spending and saving after income taxes have been accounted for, serving as an indicator of economic health.

Savings

Money that is set aside from income not used for consumption, which may be stored for future expenses, investments, or emergencies.

Capital Stock

The total amount of physical and financial assets owned by a company or country, including buildings, machinery, and equity investments.