Asked by Christopher Trujillo on May 03, 2024
Verified
A firm never operates:
A) at the minimum of its ATC curve.
B) at the minimum of its AVC curve.
C) on the downward-sloping portion of its ATC curve.
D) on the downward-sloping portion of its AVC curve.
E) on its long-run marginal cost curve.
Downward-Sloping
A characteristic of demand curves where price and quantity demanded move in opposite directions.
ATC Curve
A graphical representation of the average total cost of producing various quantities of output, showing how unit costs change with changes in output level.
AVC Curve
A graph that represents the average variable cost of producing each quantity of output, showing how these costs vary with changes in output levels.
- Comprehend and implement the shutdown principle within the realm of business production choices.
Verified Answer
ZK
Zybrea KnightMay 07, 2024
Final Answer :
D
Explanation :
A firm operates where marginal revenue equals marginal cost, but it will never operate on the downward-sloping portion of its AVC curve because that would mean producing output at a cost that exceeds revenue, which would result in losses.
Learning Objectives
- Comprehend and implement the shutdown principle within the realm of business production choices.