A. Average variable costs/ marginal costs/ average total costs/ average fixed co

Question

A. Average variable costs/ marginal costs/ average total costs/ average fixed costs B. Produce more/ produce less/ shut down C. Increase/ decrease D. Equal/ farthest apart Minimized/ maximized E.less/ greater Fill in the blanks to make the following statements correct a. The shut-down price is the price at which the firm can just cover its b. If the average variable cost of producing any given level of output exceeds the price at which it can be sold, then the firm should c. If a firm is producing a level of output such that MC> MR, that firm should d. The profit-maximizing level of output for a price-taking firm is the output at which MR and MC are e. If a perfectly competitive firm is producing its profit-maximizing level of output and the price of its output rises, then MR will bethan MC and the firm should output. -M and the gap between TR and TC is M output. |

Explanation / Answer

Ans

A. Average variable costs

The shut down point is at the minimum of the AVC.

B.Shut down

The firm should shut down because at any given level of output it will incur a loss.

C.

Decrease output

If mC is greater than mr then output should be reduced until Mc equals MR.

D.Equal and maximized

For profit maximization Mc should equal Mr which also means that the distance between Mc and Mr would be maximum.

E.

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