Refer to Figure 9.4. In the short run this firm should and in the long run this firm should , if economic conditions do not change.

A) shut down; exit the industry
B) exit the industry; shut down
C) continue to produce where MC = MR; expand
D) continue to produce where MC = MR; shut down

Question

Refer to Figure 9.4. In the short run this firm should ________ and in the long run this firm should ________, if economic conditions do not change.

A) shut down; exit the industry
B) exit the industry; shut down
C) continue to produce where MC = MR; expand
D) continue to produce where MC = MR; shut down

Yaani Sahirah · Accepted Answer

Final Answer : A, Explanation :  In the short run, if a firm cannot cover its variable costs, it should shut down. In the long run, if it cannot cover all its costs (including fixed costs), it should exit the industry. This choice reflects the decision-making process for a firm facing losses in both the short and long term if economic conditions do not change.

Refer to Figure 9.4. In the short run this firm should and in the long run this firm should , if economic conditions do not change.

A) shut down; exit the industry
B) exit the industry; shut down
C) continue to produce where MC = MR; expand
D) continue to produce where MC = MR; shut down

Definitions

Learning Objectives

Learning Objectives

Related questions