If the market price is $5 and you are currently producing at a level where average total cost is $3 and falling, you should
a. b or c, it doesn't matter
b. shut down
c. produce only enough to cover variable costs
d. produce where MR = MC
e. produce until the average total cost and average revenue are equal
D
You might also like to view...
In 2002 the steel industry successfully lobbied Congress to impose a tariff of 8 to 30 percent on foreign steel. Which of the following is an unintended consequence of this tariff?
(a) U.S. steel firms were protected from the price cutting efforts of foreign competitors benefiting from governmental support in their countries. (b) U.S. steel firms could charge higher steel prices in order to boost profits. (c) Many steel-using firms in the U.S. went out of business and about 200,000 workers lost their jobs to higher steel prices. (d) American steel workers kept their jobs.
Which of the following is the best example of the substitution effect?
a. Joe buys fewer apples and more oranges as the result of an increase in the price of apples. b. Joe buys more apples when his income increases. c. Joe buys an apple slicer when the price of apples decreases. d. Joe buys less sugar as the result of an increase in price of apples.