If a firm is currently equating MR and MC and product price = $24, AVC = $22, and ATC = $26, then in the long run this firm:
A) will continue to operate at a loss.
B) will earn a positive profit.
C) will go out of business.
D) should increase output.
E) should decrease price.

Question

Quizplus · Accepted Answer

In the long run, the firm will go out of business because it is currently operating at a loss (since ATC > price), and in the long run, firms cannot sustain losses.

If a Firm Is Currently Equating MR and MC and Product