According to the Shutdown Rule,a Firm Should Produce No Output

question 31

Multiple Choice

According to the shutdown rule,a firm should produce no output in the short run if

• A)price is below minimum average total cost.
• B)price is above minimum average total cost.
• C)total revenues are lower than total fixed costs.
• D)price is below minimum average variable costs.

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Definitions:

Aggregate Supply Curve

A graphical representation depicting the total supply of goods and services that firms in an economy are willing to produce at various price levels.

Average Price Level

The average of current prices across the entire spectrum of goods and services produced in the economy.

Final Goods

Final goods are products that have completed the manufacturing process and are purchased for consumption by the end consumer rather than for resale or further processing.

Keynesian Point of View

An economic theory suggesting that government intervention through fiscal and monetary policy can mitigate the adverse effects of recessions, depressions, and booms.