Asked by Shannon Williams on Jul 05, 2024
Verified
In the short run,a firm will continue to sell its product as long as:
A) it is making a positive profit.
B) the price is greater than average total costs.
C) the price is greater than average variable costs.
D) its marginal cost is increasing.
Average Total Costs
The total cost of production divided by the quantity produced, representing the per-unit cost of production.
Average Variable Costs
The sum of all variable production expenses divided by the amount of output generated.
- Comprehend the circumstances that influence a perfectly competitive firm's decision to undertake production in the short run.
- Explain the influence and function of fixed and variable costs in determining a company's decision on production.
Verified Answer
LW
Lauryn williamsJul 12, 2024
Final Answer :
C
Explanation :
In the short run, a firm will continue to operate as long as it can cover its average variable costs, even if it's not covering its total costs. This is because, in the short run, some costs are fixed and cannot be avoided, so as long as the firm can cover its variable costs, it can contribute to covering some of its fixed costs, minimizing losses.
Learning Objectives
- Comprehend the circumstances that influence a perfectly competitive firm's decision to undertake production in the short run.
- Explain the influence and function of fixed and variable costs in determining a company's decision on production.