Author Question: A firm sets its price at 10.00 per unit. It has an average variable cost of 8.00 and an average ... (Read 109 times)

darbym82 · **on:** Jul 1, 2018

A firm sets its price at 10.00 per unit. It has an average variable cost of 8.00 and an average fixed cost of 4.00 per unit. In the long run, this firm is
a. earning zero profits and hence should shut down.
b. unable to cover all of its fixed cost and hence should shut down.
c. incurring a profit.
d. incurring a loss per unit of 2.00, but since it can still cover its variable costs, should continue to operate.

Question 2

If Tom threatens to tell, what would Sarah's best response be?
a. Hit
b. Not hit
c. Run
d. Hide