Principles of Microeconomics, 7th Edition

Published by South-Western College
ISBN 10: 128516590X
ISBN 13: 978-1-28516-590-5

Chapter 14 - Part V - Firms in Competitive Markets - Quick Check Multiple Choice - Page 296: 3

Answer

Ans: Option D- marginal, average variable

Work Step by Step

The firm shuts down if the revenue that it would earn from producing is less than its variable costs of production. If the firm shuts down temporarily it still has to pay it’s fixed costs. Shut down if TR < VC Dividing the inequality by Q both sides, Shut down if TR/Q < VC/Q Shut down if P
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