a. Consider the statement: “Even if a firm is losing money, it may be better to stay in business in the short run.” This statement ismultiple choice 1true, if the loss is less than the fixed cost.true, if the loss is less than the variable cost.false, because it could be better to stay in business in the long run.false, because a firm should only stay in business if it is making money.b. The firm should produce in the short run as long as the pricemultiple choice 2exceeds the average fixed cost.exceeds the average variable cost.is less than the average variable cost.is less than the average fixed cost.

Multiple Choice QuestionIf a monopolistically competitive firm is producing where its marginal revenue is less than its marginal cost, then the firmMultiple choice question.is maximizing profits.should produce more output to increase profits.should shut down in the short run.should produce less output to increase profits or reduce losses.should shut down in the long run.

If a perfectly competitive firm is facing a situation where the price of its product is lower than the average total cost, which of the following statements is true?Multiple ChoiceOther firms will want to enter the industry because of the economic profits generated by the firm.The firm may be earning some accounting profits, but less than what it could earn elsewhere.The firm is generating a loss, and if things are not expected to improve the firm will leave the industry.The firm may earn economic profits in the long run if it expands its plant in order to exploit economies of scale.

Consider a firm that has no fixed costs and that is currently losing money. a. Are there any situations in which it would want to stay open for business in the short run? multiple choice 1No, the firm will want to shut down.Yes, the firm might want to operate in the long run.Yes, the firm will want to stay in business if revenue is greater than variable costs.There is insufficient information to make this determination. b. A firm with no fixed costs multiple choice 2has a normal profit.has an accounting profit.should shut down.is really in the long run.

In the short run, if a firm's marginal physical product of labour is decreasing,a) the firm's output must also be decreasing.b) the firm's variable cost must be decreasing.c) the firm’s marginal cost must be increasing.d) the firm’s average variable cost must be decreasing

If the market price is below the average variable cost, the firm is:Multiple choice question.losing money in the long run and should shut down.breaking even in the short run and should shut down.making money in the short run and should keep producing.losing money in the short run and should shut down.