Question

<ol><li><strong>4) </strong>MULTIPLE CHOICE (identify the one best answer below and

<em>explain your reasoning for each option</em>): <strong>Read the question carefully! </strong>If a profit-maximising, perfectly competitive firm is producing a quantity at which price is <em>higher </em>than average total cost but <em>lower </em>than average variable cost, then </li><li><strong>keep producing both in the short run and in the long run </strong></li><li><strong>keep producing in the short run but exit the market in the long run </strong></li><li><strong>shut down in the short run but return to production in the long run </strong></li><li><strong>shut down in the short run and exit the market in the long run </strong></li><li><strong>Such situation cannot occur. </strong></li></ol>

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