A profit-maximising firm continues to operate even though it is losing money. It sells its product at a price of $100. From these facts we can deduce that:

Question

BlackTom AI · Accepted Answer

To approach this question, I’ll walk through what the given facts imply about costs and pricing in the short run.
Option a: Average variable cost is less than $100. This is consistent with a profit-maximising firm choosing to operate despite losses. If price (P) is $100 and P > AVC, the firm covers variable costs and contributes to fixed costs, so continuing production is rational in the short run even when total costs exceed total revenue.
Option b: Average fixed cost is less than $100. While AFC can be a sizable portion of total costs, its relation to the price alone doesn’t determine the decision to operate. The firm could have AFC greater than, equal to, or less than $100 depending on fixed costs and output, but the key driver for the shutdown decision is whether price covers variable costs, not fixed costs.
Option c: Average total cost is less than $100. If ATC were below $100, the firm would be turning a profit at this output level (since price equals $100). However, the premise states the firm is losing money, so ATC must be at least $100 or higher; therefore this option is incompatible with the given situation.
Option d: Marginal cost is decreasing. The statement about marginal cost being decreasing does not directly explain why a firm would continue operating while losing money. Shutdown decisions are governed by whether price covers average variable cost, not by the behavior of marginal cost alone, so this option misidentifies the key criterion.
Overall, the only option that aligns with the condition P = $100 and the firm choosing to operate despite losses is that average variable cost must be less than $100, enabling the firm to cover variable costs and contribute to fixed costs.

A profit-maximising firm continues to operate even though it is losing money. It sells its product at a price of $100. From these facts we can deduce that:

查看解析

登录即可查看完整答案

类似问题

Question at position 7 In the table, if the firm hires 5 workers, and produces 10 units, average variable costs equal, [table] # of Workers | Total Cost 0 | 50 1 | 110 2 | 160 3 | 200 4 | 240 5 | 250 6 | 260 7 | 280 8 | 310 9 | 350 [/table]A) 50B) 80C) 20D) 200Clear my selection

Suppose the short-run production function is [math: q=10L] , if the wage rate is £10 perunit of labour, then AVC equals:

Suppose the short-run production function is [math: q=10L] , if the wage rate is £10 perunit of labour, then AVC equals:

Anna owns a dog grooming salon in Brunswick, Georgia. The above table has Anna's total product schedule. Anna pays each worker $300 per week and she pays rent of $600 a week for her salon. These are her only costs. When Anna has a staff of 6 workers, her average variable cost equals

安娜在佐治亚州布伦瑞克市经营一家宠物美容沙龙。上表列出了安娜的总产品成本。安娜每周支付每位员工 300 美元，并支付沙龙每周 600 美元的租金。这些是她唯一的成本。当安娜拥有两名员工时，她的平均变动成本等于

Quantity Total Cost ($) 0 12 1 20 2 26 3 30 4 37 5 45 6 54 7 64 What is the average variable cost when quantity is 6?

更多留学生实用工具

考试浏览器助手

风格化写作助手

论文查重助手

文献引用助手

课堂转译助手

课堂笔记助手

Quiz搜索助手

学校历年真题

智能刷题助手

智能匹配练习

希望你的学习变得更简单