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

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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PQ 14.05 Reagan is a farmer and sells her wheat in a perfectly competitive market. Reagan produces 30,000 bushels of wheat for an average total cost of $7.50, marginal cost of $7.30, and average variable cost of $7.10. In the short-run, Reagan should produce more wheat if the current price is above, and should shut down if the current price is below Select an answer and submit. For keyboard navigation, use the up/down arrow keys to select an answer. a $7.50; $7.30 $7.50; $7.10 $7.10; $7.30 $7.10; $7.00 e $7.30; $7.10 f $7.30; $7.00
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