Suppose that price is below the current average total cost (ATC) but above the current average variable cost (AVC) of producing a unit, and that the market price is expected to rise at least to ATC in the near future. In the short run, a firm that is a price taker would immediately shut down and get out of the industry. O continue to produce a quantity such that marginal revenue equals marginal cost. shut down temporarily, in hopes of restarting in the near future. O cut price and expand output in hopes of achieving economies of scale
Suppose that price is below the current average total cost (ATC) but above the current average variable cost (AVC) of producing a unit, and that the market price is expected to rise at least to ATC in the near future. In the short run, a firm that is a price taker would immediately shut down and get out of the industry. O continue to produce a quantity such that marginal revenue equals marginal cost. shut down temporarily, in hopes of restarting in the near future. O cut price and expand output in hopes of achieving economies of scale
Micro Economics For Today
10th Edition
ISBN:9781337613064
Author:Tucker, Irvin B.
Publisher:Tucker, Irvin B.
Chapter8: Perefect Competition
Section: Chapter Questions
Problem 5SQP
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![Suppose that price is below the current average total cost (ATC)
but above the current average variable cost (AVC) of producing
a unit, and that the market price is expected to rise at least to
ATC in the near future. In the short run, a firm that is a price
taker would
immediately shut down and get out of the industry.
O continue to produce a quantity such that marginal revenue equals
marginal cost.
shut down temporarily, in hopes of restarting in the near future.
O cut price and expand output in hopes of achieving economies of
scale](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fdc2cdcb0-1195-40c1-b872-7e9b5a9fa96d%2F19ab1422-1f9f-40cc-8ece-1687db967af8%2Faczukpq_processed.jpeg&w=3840&q=75)
Transcribed Image Text:Suppose that price is below the current average total cost (ATC)
but above the current average variable cost (AVC) of producing
a unit, and that the market price is expected to rise at least to
ATC in the near future. In the short run, a firm that is a price
taker would
immediately shut down and get out of the industry.
O continue to produce a quantity such that marginal revenue equals
marginal cost.
shut down temporarily, in hopes of restarting in the near future.
O cut price and expand output in hopes of achieving economies of
scale
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