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Question
Calvins Campgrounds is a firm conducting business in a competitive market. Calvin realizes he is making a loss and is trying to decide whether to shut down or stay open. He should stay open
a. regardless of the price being charged.
b. if the price being charged is less than his minimum average variable cost (AVC).
c. if his revenues do not cover his variable costs.
d. if his revenues cover his variable costs.
e. as long as he is making revenue.
Answer
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Related questions
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Suppose Solomon lives in a community with no price controls. What do you expect will happen if his town borders a community where there is a binding price ceiling on most products?
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