9.3 Short-Run Decisions
Assume the following total cost schedule for a perfectly competitive firm.
TABLE 9-2
-Refer to Table 9-2.This profit-maximizing firm would produce no output in the short run if the market price of its output dropped below
A)$35.
B)$40.
C)$70.
D)$90.
E)$100.

Question

9.3 Short-Run Decisions
Assume the following total cost schedule for a perfectly competitive firm.
  TABLE 9-2
-Refer to Table 9-2.This profit-maximizing firm would produce no output in the short run if the market price of its output dropped below
A)$35. 
B)$40. 
C)$70. 
D)$90. 
E)$100.

Quizplus · Accepted Answer

The firm would produce no output in the short run if the market price is below the average variable cost (AVC). If $35 is the AVC, the firm would shut down if the price drops below this level.

9.3 Short-Run Decisions Assume the Following Total Cost Schedule for a Perfectly Competitive