Chuck Diesel Burger is a food truck in Houston, Texas. Imagine that Chuck Diesel Burger's minimum average total cost (ATC) is $3.75 and that its minimum average variable cost (AVC) is $2.50. Assume there are no barriers to entry into or exit from the food-truck market. Chuck Diesel Burger will suffer a loss but still produce if the price is equal to:

Question

Quizplus · Accepted Answer

Chuck Diesel Burger will suffer a loss but still produce if the price is equal to $3.00 because it covers the average variable cost ($2.50) but not the average total cost ($3.75). This means the firm can cover its variable costs and some of its fixed costs, minimizing losses.

Chuck Diesel Burger Is a Food Truck in Houston, Texas