(Figure: Revenues,Costs,and Profits for Tomato Producers III) Use Figure: Revenues,Costs,and Profits for Tomato Producers III.The market for tomatoes is perfectly competitive.If the market price of a bushel of tomatoes is $12,in the short run this farm will:

A) minimize its losses by shutting down.
B) minimize its losses by continuing to produce.
C) break even.
D) earn an economic profit.

Question

unsympathetic intellect · Accepted Answer

Final Answer : B, Explanation :  At a market price of $12, the farm's total revenue is above its variable costs, but still below its total costs. Therefore, by continuing to produce in the short run, the farm can minimize its losses. Shutting down would result in a loss equal to its fixed costs.

Definitions

Learning Objectives

Learning Objectives

Related questions