Exhibit 8-3 Cost per unit curves
-As shown in Exhibit 8-3, the firm will produce in the short run if the price is at least equal to:

Question

Exhibit 8-3 Cost per unit curves 
-As shown in Exhibit 8-3, the firm will produce in the short run if the price is at least equal to:

Quizplus · Accepted Answer

In the short run, a firm will produce as long as the price is equal to or greater than the minimum average variable cost (AVC) point. This is because the firm can still cover its variable costs and will therefore be better off producing than shutting down. In Exhibit 8-3, the minimum AVC point is at $1.50 per unit (point B). At this price, the firm is able to cover its variable costs and some of its fixed costs, although it is still operating at a loss. Therefore, the best choice for the firm would be to produce at point B as long as the price remains at $1.50 per unit or higher.

Exhibit 8-3 Cost Per Unit Curves