When a perfectly competitive firm finds that its market price is below its minimum average variable cost, it will sell
A) any positive output the entrepreneur decides upon because all of it can be sold.
B) nothing at all; the firm shuts down.
C) the output where average total cost equals price.
D) the output where marginal revenue equals marginal cost.
B
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A technological improvement lowers the cost of producing corn. As a result, the price of a pound of corn ________ and the quantity of corn ________
A) rises; increases B) rises; decreases C) falls; increases D) falls; decreases E) falls; does not change
If the Federal Reserve chooses to fight high unemployment with expansionary monetary policy and firms and consumers expect this policy to increase inflation, which of the following would you expect to see?
A) an upward shift of the short-run Phillips curve B) a downward shift of the short-run Phillips curve C) a decrease in the long-run aggregate supply curve D) Both B and C are correct answers.