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