Micro Final Chapter 10
Say a competitive firm is producing at point where ATC = $10, AVC = $2. If the firm charges $5 for its output, then in the short-run this firm should
Continue to operate
At the output where MC = ATC = P the firm
Has no economic profit
In general, economists assume that firms
Maximize economic profit
If the demand curve falls below the ATC curve but lies above AVC, then the firm should
Operate in the short run but not the long run
If a firm's demand curve falls below its AVC curve, then the firm should
Shut down now
A firm is currently selling its product at $20 each. It estimates that its average total cost of production is $100 and its average fixed cost is $40. In the short run the firm should
Shutdown
In a competitive industry the industry's short-run supply curve is
The horizontal sum of the marginal cost curves
When the perfectly competitive firm maximizes profits the price of its product always equals
all the choices are correct