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A perfectly competitive firm will shut down immediately when the market price falls below
(a) average variable cost.(b) average total cost.(c) average fixed cost.(d) marginal cost.(e) None of the above.

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Keith Leannon
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4 Mar 2019

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Related questions

When a perfectly competitive firm decides to shut down, it is most likely that:

A) marginal cost is above average variable cost

B) marginal cost is above average total cost

C) price is below the firm's average variable cost

D) fixed costs exceed variable costs

 

When a perfectly competitive firm decides to shut down, it is most likely that
a. marginal cost is above average variable cost.
b. marginal cost is above the average total cost.
c. price is below the firm's average variable cost.
d. fixed costs exceed variable costs

10-When marginal cost is greater than average total cost,
A. Average total cost must be increasing with output
B. Average variable cost must be decreasing with output
C. Average fixed cost must be increasing with output
D. Marginal cost must be increasing with output

11-If a firm's demand curve falls below its AVC curve, then the firm should
A. Shut down now
B. Operate in the short run but not the long run
C. Set price = marginal cost
D. Shutdown in the long-run

12- The demand curve facing a perfectly competitive firm is
A. Upward sloping
B. Perfectly inelastic
C. Downward sloping
D. Perfectly elastic

13-If the demand curve falls below the ATC curve but lies above AVC, then the firm should
A. Should shut down
B. Operate in the short run but not the long run
C. Set price = marginal cost
D. Operate in the short run and the long run

14-At the output where MC = ATC = P, the perfectly competitive firm
A. Should shutdown
B. Has no economic profit
C. Is not profit maximizing
D. Should raise output

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