Question

multiple choice
1. The supply curve of a price-taker firm in the short run is the:
a. firm's average variable cost curve.
b. portion of the firm's average total cost curve that lies above average variable cost curve.
c. portion of the firm's marginal cost curve that lies above average variable cost curve.
d.firm's marginal revenue curve.

2. If a competitive firm is losing money then it should:
a. always shut down.
b. shut down if its losses are greater than total fixed costs.
c. shut down if its total fixed costs are greater than losses.
d. raise its price.

Answer 1

c. portion of the firm's marginal cost curve that lies above average variable cost curve.
b. shut down if its losses are greater than total fixed costs.