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Question

0? ??g" dll 35% [01:31 PM Week 5 Exam-EC02 https://myclasses.southuniver , Week 5 Exam v Week 5 Exam Est. Length: 2:00:00 Angela Campbell: Attempt 1 Mrs. Smith operates a business in a competitive market. The current market price is $8.50. At her profit-maximizing level of production, the average variable cost is $8.00, and the average total cost is $8.25. Mrs. Smith should a) shut down her business in the short run but continue to operate in the long run. b) continue to operate in the short run but shut down in the long run

Explanation / Answer

Option C.

Explanation: The market price ($8.50) is higher than the average total cost ($8.25). Therefore, the firm will keep on making profits in the short and long run.

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