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.
C
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An expansion ends when the economy
A) hits a trough and then enters a recession. B) hits a peak and then enters a recession. C) begins to grow following a peak. D) has grown for two quarters in a row.
When the inflation rate is high and volatile,
A) investment is less risky and gains from trade are reduced. B) real output and real wages will grow rapidly. C) employment will expand and the unemployment rate will decline. D) investment is more risky and gains from trade are reduced.