Suppose a profit-maximizing firm in a cfompetititvemarketproduces rupper bands.

Question

Suppose a profit-maximizing firm in a cfompetititvemarketproduces rupper bands. When the market price for rubber bandsfalls below the minimum of its average total cost, but still liesabove the minimum of average variable cost, the firm. a.will experience losses but will continue to produce rubberbands b.will shut down c. will be earning both economic and accounting profits. d. should raise the price of its product. Suppose a profit-maximizing firm in a cfompetititvemarketproduces rupper bands. When the market price for rubber bandsfalls below the minimum of its average total cost, but still liesabove the minimum of average variable cost, the firm. a.will experience losses but will continue to produce rubberbands b.will shut down c. will be earning both economic and accounting profits. d. should raise the price of its product.

Explanation / Answer

A. Experience losses but still operate.

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