Consider the figure. At the price of $8, the firm's short-run decision should be to A. stop producing because variable costs cannot be covered OB. exit the market OC. continue producing because it is making a positive profit. OD. increase production Dollars per Unit $8 Output MC ATC AVC

Consider the figure. At the price of $8, the firm's short-run decision should be to A. stop producing because variable costs cannot be covered OB. exit the market OC. continue producing because it is making a positive profit. OD. increase production Dollars per Unit $8 Output MC ATC AVC

Managerial Economics: A Problem Solving Approach

5th Edition

ISBN:9781337106665

Author:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor

Publisher:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor

Chapter5: Investment Decisions: Look Ahead And Reason Back

Section: Chapter Questions

Problem 5.7IP

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A: Question is solved below Explanation:

Question

Consider the figure. At the price of $8, the firm's short-run decision should be to
A. stop producing because variable costs cannot be covered
OB. exit the market.
OC. continue producing because it is making a positive profit.
OD. increase production.
Dollars per Unit
$8
Output
MC
ATC
AVC

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