Asked by
Kitti-Talei Drodrolagi
on Dec 11, 2024
Verified
Suppose that price is below the minimum average total cost (ATC) but above the minimum average variable cost (AVC) and that the market price is expected to rise at least to ATC in the near future. In the short run, a firm that is a price taker would
A) immediately shut down and get out of the industry.
B) continue to produce a quantity such that marginal revenue equals marginal cost.
C) shut down temporarily, in hopes of restarting in the near future.
D) cut price and expand output in hopes of achieving economies of scale
Minimum Average Total Cost
The lowest point on the average total cost curve, representing the most efficient scale of production for minimizing costs per unit.
- Recognize the situations that necessitate a firm to carry on, lessen, or discontinue its production operations during a brief period.
- Identify the differences in decision-making for businesses in the short term versus the long term within competitive markets.
Verified Answer
NB
Learning Objectives
- Recognize the situations that necessitate a firm to carry on, lessen, or discontinue its production operations during a brief period.
- Identify the differences in decision-making for businesses in the short term versus the long term within competitive markets.
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