When a Perfectly Competitive Firm Decides to Shut Down, It

question 292

Multiple Choice

When a perfectly competitive firm decides to shut down, it is most likely that

• A)marginal cost is above average variable cost.
• B)marginal cost is above average total cost.
• C)price is below the firm's average variable cost.
• D)fixed costs exceed variable costs.

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Definitions:

Center

The midpoint or origin in a coordinate system; also refers to the midpoint of a shape or object in geometry.

Method of Substitution

A technique used to solve systems of equations by solving one equation for one variable and then substituting that expression into the other equation(s).

System of Equations

A set of equations with the same variables, where the solution is the set of values that satisfies all equations simultaneously.

Hyperbola

A type of smooth curve lying in a plane, defined by its geometric properties or by equations that satisfy its definition, characterized by two branches mirrored across the axis or center.