In: Economics
For each of the following, evaluate whether the statement is true or false, and provide an explanation for your answer.
The first statement is False. Shut down point of a firm will come if the price is less than the average variable cost or the revenue should cover the total variable cost.
The second statement is true. as if the marginal cost is above average cost, this means average cost is rising and if marginal cost is less than average cost, this means average cost is falling.
The given statement is False. This is because for a profit maximizing monopolist, price or average revenue is more than that of marginal revenue.