Assume a firm has the following cost and revenue characteristics at its current level of output: price=$8.00 . average variable cost=$6.00 and average fixed cost =$4.00 . In the long run, the firm
a. Should shut-down as its making a loss of $2
b. Should continue operating as long as it is covering the variable costs of $6
c. Should continue operating as long as it is covering the fixed costs of $4
d. Should not shut down
a
You might also like to view...
Since 1970 there has been a clear increase in the proportion of the banking industry assets made up of
A) mortgage loans. B) state and local government securities. C) cash. D) business loans.
Which of the following is true about unemployment?
a. the benchmark high-employment level is most likely between 3 and 4 percent b. In recent years, the appropriate benchmark high-employment level has risen. c. Based on the experience of the 1960s, a 7 percent unemployment rate was too low to be sustained without a buildup of inflationary pressure d. During the 1970s, the benchmark high-employment level rose but this was not observed by economists at the time.