A Firm in a Competitive Industry Faces the Following Short-Run

question 110

Multiple Choice

A firm in a competitive industry faces the following short-run cost and revenue conditions: ATC = $16; AVC = $8; and MR = MC = $12. This firm should

• A) expand production and keep price constant.
• B) decrease production and raise its price.
• C) shut down.
• D) continue to operate at the same price and output level in the short run.

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Definitions:

Alcohol

A psychoactive substance, typically found in drinks like beer, wine, and spirits, that can alter mood and behavior when consumed.

Antabuse

A prescription medication used to help people who have a drinking problem control their desire to drink alcohol. The generic name is disulfiram.

Seasonal Affective Disorder

A type of depression that occurs at a certain time of the year, usually in winter, when there is less natural sunlight.

Bright Lights

Intense, vivid illumination often used for visibility, signaling, or decoration.