DP Economics

Test builder »

Question 18N.3.HL.TZ0.d

Select a Test
Date November 2018 Marks available [Maximum mark: 2] Reference code 18N.3.HL.TZ0.d
Level HL Paper 3 Time zone TZ0
Command term Explain Question number d Adapted from N/A
d.
[Maximum mark: 2]
18N.3.HL.TZ0.d

Firm A produces cartons of coffee. Figure 1 illustrates the firm’s total cost (TC) and variable cost (VC) at different output levels per month.

Figure 1

Figure 2 illustrates the average total cost (ATC), average variable cost (AVC) and marginal cost (MC) at different output levels for Firm B, which produces cans of tea.

The price of tea in the perfectly competitive tea market is presently $21 per can.

Sometimes a firm continues to produce in the short run, even when it is making an economic loss. Explain why the firm might choose to do this.

[2]

Markscheme

Syllabus sections