If price is below average total cost, a profit- maximising firm will:
A) raise the price level
B) lower the price level to increase sales
C) continue to operate as long as average revenue is greater than average variable cost
D) shut down, as it cannot cover its total costs

Question

Quizplus · Accepted Answer

A profit-maximizing firm will continue to operate in the short run if it can cover its variable costs, even if it cannot cover its total costs, as long as average revenue is greater than average variable cost.

If Price Is Below Average Total Cost, a Profit- Maximising