When Price Is Below Average Variable Cost, a Firm in a Competitive

question 451

Multiple Choice

When price is below average variable cost, a firm in a competitive market will

• A)shut down and incur fixed costs.
• B)shut down and incur both variable and fixed costs.
• C)continue to operate as long as average revenue exceeds marginal cost.
• D)continue to operate as long as average revenue exceeds average fixed cost.

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Definitions:

Physical Weathering

The breakdown of rocks and minerals into smaller pieces by physical forces without chemical alteration.

Soil Formation

The process by which rocks break down and decompose over time to form soil, influenced by factors like climate, organisms, topography, and time.

Stalagmite

A conical, cylindrical, or moundlike cave formation that is developed upward from the floor of a cave and is composed mostly of calcium carbonate.

Gray Limestone

A sedimentary rock primarily composed of calcium carbonate, often containing fossils, and typically forming in shallow marine environments.