Mrs. Smith operates a business in a competitive market. The current market price is $7.50 . At her profit-maximizing level of production, the average variable cost is $8.00, and the average total cost is $8.25 . Mrs. Smith should
a. shut down her business in the short run but continue to operate in the long run.
b. continue to operate in the short run but shut down in the long run.
c. continue to operate in both the short run and long run.
d. shut down in both the short run and long run.
d
Economics
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A perfectly competitive firm and a monopolistically competitive firm are similar in each of the following respects except
a. each has many buyers and sellers. b. firms sell homogeneous products in both markets. c. in having perfect information. d. for freedom of exit and entry.
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