In the short run, why would a firm in a perfectly competitive market shut down production if the prevailing market price falls below the lowest possible average variable cost?
a. At that point (economic) profit is zero.
b. Below that point average revenue becomes less than marginal revenue.
c. Below that point marginal revenue becomes insufficient to pay for avoidable average variable cost.
d. Below that point other firms with similar cost will find it profitable to enter the market and take away demand from the existing firms.
c
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Which of the following pricing practices, if proved, would prove a firm engaged in predatory pricing?
A) The firm sets prices below marginal cost per unit. B) The firm sets prices below sunk cost per unit. C) The firm sets prices below total cost per unit. D) The firm sets prices low enough to drive all its competitors out of business. E) None of the above would prove predatory pricing had occurred.
The exchange rate states the price, in terms of one currency, at which another currency can be bought.
Answer the following statement true (T) or false (F)