Which of the following conditions would result in the short run marginal cost curve not correctly reflecting the supply behavior of a profit-maximizing firm?
A)The firm is a price taker.
B)Price exceeds average total cost.
C)The elasticity of demand facing the firm is -3.
D)The firm can vary several inputs in the short run.

Question

Quizplus · Accepted Answer

The elasticity of demand facing the firm is -3.When the elasticity of demand facing the firm is less than -1, the marginal revenue curve will be below the marginal cost curve, and the profit-maximizing firm will not produce any output.

Which of the Following Conditions Would Result in the Short