If market price is greater than the minimum of AVC but below the minimum of AC, then
A) the firm will shut down.
B) revenue covers variable costs and some of the fixed costs and profit is positive.
C) revenue covers variable costs and some of the fixed costs, although profit is negative.
D) economic profit is zero.
C
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If the government increases spending and there is a complete direct expenditure offset, then
A) aggregate demand and real Gross Domestic Product (GDP) will not change. B) aggregate demand and real Gross Domestic Product (GDP) will increase by the amount of the spending increase. C) the price level will drop. D) the government spending multiplier will be greater than zero.
Shane holds wealth worth $10,000 . He considers investing it equally in two gambles one of which has a probability of 0.6 to yield a return of 10% and the other has a probability of 0.4 to yield a return of 20%. What will be Shane's total expected return from the two gambles?
a. $1,000 b. $700 c. $500 d. $900 e. $1,100