Peg's Kegs sells kegs in a perfectly competitive market. Because low demand forced price below average variable cost, Peg has made the short-run decision to shut down. Her current loss is
a. zero
b. greater than if she had kept operating
c. the same as the losses she was incurring while operating
d. equal to fixed cost
e. less than her total revenue
D
You might also like to view...
The level of output determined by the intersection of the short-run aggregate supply curve and the aggregate demand curve
A) may be above, below, or equal to full-employment output. B) is always above full-employment output. C) is always below full-employment output. D) always corresponds to full-employment output.
Normal profit is a(n) ________ cost because ________
A) implicit; it represents the cost of not running another firm B) explicit; a firm must pay income taxes on its profit C) implicit; it represents the cost of economic depreciation D) accounting; wages are considered an explicit cost E) depreciation; the equipment the firm owns wears out over time