Banks hold 100 of their checking deposits as vault cash to ensure ...

[Capo]

Banks hold 100 of their checking deposits as vault cash to ensure that bank runs do not occur.
 
  Indicate whether the statement is true or false

Question 2

Assume two firms have the same total costs of production. Firm A's average variable cost if 5 per unit and firm B's average variable cost is 7 . Both firms have an average total cost of 8 .
 
  If the current market price is 6 and remains unchanged what action will both firms take in the short run and the long run?

[Swizqar]

Answer to Question 1

FALSE

Answer to Question 2

Firm B will shut down in the short run because it is suffering operating losses. If the product price doesn't reach 8 or better it will exit the industry. Firm A will continue to produce in the short run because it is making an operating profit. However, if market price does not rise to 8 or better it too will exit in the long run.

[Capo]

Thanks for the timely response, appreciate it

[dyrone]

Excellent