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.

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.

If price is equal to short-run average variable cost, the firm is at the point known asQuestion 3Select one:a.the profit maximizing point.b.the shutdown point.c.the break even point.d.the revenue maximizing point.

A firm operates in a perfectly competitive market. The firm’s total cost of production is given by the following equation: TC(q) = 100 + 33q2 + 5q, where q is the quantity supplied. What is the shutdown point for this firm in the short run, or in other words, what is the market price below which a firm is better off not supplying any units in the short run? [Advice: draw AVC and MC]

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.

The short-run marginal and average variable cost curves for a competitive firm are given by MC = 2+2q and AVC = 2+q. The profit-maximizing level of output for a firm is 4 and its total fixed cost is $18. Which of the following must be true about the firm? Group of answer choices The firm is charging a price of $4 and covering its average variable cost, hence it should continue operating in the short-run. The firm is charging $10 and will remain in the industry in the short-run; but it is not covering its total costs and will consider leaving the industry in the long run. The firm is charging a price of $4 and making a short-run loss, hence it should shut down immediately. The firm is charging a price of $10 and making a zero profit, hence it should shut down eventually. The firm is charging a price of $10 and making a positive profit, hence it will remain in the industry in the long-run.