If the market price in a competitive market is below the minimum of average variable cost the firm will shut down
Indicate whether the statement is true or false
True . At this price total fixed costs are smaller than the operating loss. It pays for the firm to shut down.
You might also like to view...
Assume that a perfectly competitive market is in long-run equilibrium. Suppose as a result of a health hazard associated with the industry's product, demand decreases drastically. What is the immediate result of this event?
A) The typical firm's average total cost curve shifts downward. B) The typical firm's marginal cost curve shifts to the left. C) The market price falls and the typical firm suffers an economic loss. D) The market supply increases to offset the fall in demand.
Which government entity calculates GDP in the United States on a quarterly basis?
A) the Treasury Department B) the Commerce Department C) the Federal Reserve D) all of the above E) none of the above