"I'm losing money, but since my fixed costs are so high, I simply cannot afford to shut down." If the firm were attempting to maximize profit, this decision may be:
a. correct if price is less than average variable cost
b. incorrect because a firm experiencing economic losses should never continue to operate.
c. correct if the firm is covering all of its variable costs.
d. incorrect since a firm should shut down whenever price falls below average total cost in the short run.
c
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Refer to the figure above. If the yuan is allowed to float, at exchange rates above E yuan per dollar:
A) the excess supply of dollars in exchange for yuan increases the value of the dollar in the foreign exchange market. B) the excess supply of dollars in exchange for yuan lowers the value of the dollar in the foreign exchange market. C) the excess demand for dollars in exchange for yuan lowers the value of the dollar in the foreign exchange market. D) the excess demand for dollars in exchange for yuan increases the value of the dollar in the foreign exchange market.
For a perfectly competitive syrup producer whose average total cost curve does not change, an economic profit could turn into an economic loss if the
A) market demand for syrup decreases. B) marginal cost curve shifts downward. C) market demand for syrup does not change. D) market demand for syrup increases. E) price of syrup rises.