A Firm Is Currently Producing at the Rate of Output

question 56

Multiple Choice

A firm is currently producing at the rate of output at which total revenues just cover its total variable costs. If demand falls, the firm should

• A) lower both price and its rate of output.
• B) shut down.
• C) increase its rate of output to make up for the lower price.
• D) not change its rate of output because it is still covering its variable costs.

---

Definitions:

Consumer

An individual who purchases goods or services for personal use, not for manufacture or resale.

Consumption Effects

The impact of consumer behavior on the economy, environment, and society, including both positive and negative consequences.

Product Cannibalization

A situation where a new product significantly reduces the sales or market share of the company's existing products.

Media Promotion

The use of various media channels, such as TV, radio, the internet, and social media, to advertise and promote a product, service, or brand to a wide audience.