Asked by
Julittza Lopez
on Nov 27, 2024
Verified
Which of the following is not a valid generalization concerning the relationship between price and costs for a purely competitive seller in the short run?
A) Price must be at least equal to average total cost.
B) Price times quantity produced must be equal to or greater than total variable cost for some level of output or the firm will close down in the short run.
C) Price may be equal to, greater than, or less than average total cost.
D) Price must be equal to or greater than minimum average variable cost for the firm to continue producing.
Valid Generalization
A conclusion drawn from specific instances that is logically sound and supported by evidence.
Purely Competitive Seller
A market participant in an industry where many sellers offer identical products, and no single seller can influence the market price.
- Examine how fixed and variable expenses influence a company's choices regarding production.
- Explain the relationship between total, average, and marginal costs and their impact on profit maximization during the short-term period.
Verified Answer
PP
Learning Objectives
- Examine how fixed and variable expenses influence a company's choices regarding production.
- Explain the relationship between total, average, and marginal costs and their impact on profit maximization during the short-term period.