If the Market Price Is Lower Than a Perfectly Competitive

question 183

Multiple Choice

If the market price is lower than a perfectly competitive firm's average total cost,the firm will

• A) immediately shut down.
• B) continue to produce if the price exceeds the average fixed cost.
• C) continue to produce if the price exceeds the average variable cost.
• D) shut down if the price exceeds the average fixed cost.
• E) shut down if the price is less than the average fixed cost.

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Definitions:

Layoff Cost

The financial impact associated with the termination of employees traditionally as a result of downsizing, restructuring, or automation.

Hiring And Training Cost

Expenses incurred in recruiting, hiring, and training new employees.

Regular Time Cost

This refers to the expenses associated with normal operations and working hours, excluding any overtime or special circumstances costs.

Over Time Cost

The added expense incurred from having employees work beyond their regular working hours.