When a perfectly competitive firm finds that its market price is below its

When a perfectly competitive firm finds that its

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80) When a perfectly competitive firm finds that its market price is below its minimum average variable cost, it will sell80) ______ A) the output level where marginal revenue equals marginal cost.B) nothing at all; the firm shuts down.C) any positive output the entrepreneur decides upon because all of it can be sold.D) the output where average total costs equal price. Answer: Explanation: A) B) C) D) B Comment: Diff: 2 Type: MC WS: 0 Var: 1 Page Ref: 391/391 Created On: May 12 2005 Modified On: Dec 18 2007 Topic: Deciding Whether to Produce or to Shut Down in the Short Run Skill: Conceptual Objective: LO4: Explain why firms may shut down temporarily. AACSB: Reflective Thinking Special Feature: None 81) Val Alvarado, an accountant quit his $80,000-a-year job and bought an existing laundry from its previous owner Ricky White. The lease has five years remaining and requires a monthly payment of $4,000. The lease 81) ______ B Explanation: A) B) C) D) Comment: Diff: 2 Type: MC WS: 0 Var: 1 Page Ref: 390/390 Created On: May 12 2005 Modified On: Dec 18 2007 Topic: Deciding Whether to Produce or to Shut Down in the Short Run Skill: Conceptual Objective: LO4: Explain why firms may shut down temporarily. AACSB: Reflective Thinking Special Feature: Making the Connection: When to Close a Laundry 82) Val Alvarado, an accountant quit his $80,000-a-year job and bought an existing laundry from its previous owner Ricky White. The lease has five years remaining and requires a monthly payment of $4,000. Val's explicit costs amounts to $3,000 per month more than his revenue. Should Val continue operating his business? 82) ______
D) Cannot be determined without information on his revenue. Answer: A Explanation: A) B) C) D) Comment: Diff: 2 Type: MC WS: 0 Var: 1 Page Ref: 390/390 Created On: May 12 2005 Modified On: Feb 28 2008 Topic: Deciding Whether to Produce or to Shut Down in the Short Run Skill: Conceptual Objective: LO4: Explain why firms may shut down temporarily. AACSB: Reflective Thinking Special Feature: Making the Connection: When to Close a Laundry Figure 11 - 6

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