If, for a given output level, a perfectly competitive firm's price is less than its average variable cost, the firm
A) is earning a profit. B) should increase output.
C) should increase price. D) should shut down.
D
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In an economy consisting of only two goods, corn and cloth, the amount of extra cloth that can be produced efficiently if corn output is reduced by one unit is equal to
a. the rate of technical substitution for corn divided by the rate of technical substitution for cloth. b. the rate of technical substitution for cloth divided by the rate of technical substitution for corn. c. the marginal cost of producing cloth divided by the marginal cost of producing corn. d. the marginal cost of producing corn divided by the marginal cost of producing cloth.
Which retail operation would have the lowest costs per book sold?
a. a small independent bookstore b. a large retail bookstore chain c. an Internet seller of books d. All would have the same costs.