A Company Finds That at Its Present Level of Production

question 136

Multiple Choice

A company finds that at its present level of production, MC = AVC at $15, MC = ATC at $20, and MC = MR at $17. Your advice to the firm regarding its short-run operations is

• A) to continue production, as it is earning an economic profit of $2 per unit.
• B) to continue production, as it is earning an economic profit of $3 per unit.
• C) to shut down.
• D) to continue production at a loss.

---

Definitions:

Deposits

Funds placed into banking institutions for safekeeping, which can include savings accounts, checking accounts, and certificates of deposit.

Reserves

Funds or materials set aside for future use or to cover unexpected emergencies; in banking, refers to the amount of money banks are required to hold as a safety measure.

Government Bond

A debt security issued by a government to support government spending, often considered a low-risk investment.

Market Rate

The prevailing interest rate available in the marketplace for loans or deposits of a specific maturity.