If a profit-maximising, perfectly competitive firm is producing a quantity at which price is higher than average total cost but lower than average variable cost, then a.keep producing both in the short run and in the long run b.keep producing in the short run but exit the market in the long run c.shut down in the short run but return to production in the long run d.shut down in the short run and exit the market in the long run e.Such situation cannot occur.
If a profit-maximising, perfectly competitive firm is producing a quantity at which price is higher than average total cost but lower than average variable cost, then a.keep producing both in the short run and in the long run b.keep producing in the short run but exit the market in the long run c.shut down in the short run but return to production in the long run d.shut down in the short run and exit the market in the long run e.Such situation cannot occur.
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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MULTIPLE CHOICE (identify the one best answer below and explain your reasoning for each option): Read the question carefully! If a profit-maximising,
a.keep producing both in the short run and in the long run
b.keep producing in the short run but exit the market in the long run
c.shut down in the short run but return to production in the long run
d.shut down in the short run and exit the market in the long run
e.Such situation cannot occur.
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