Use the following to answer question(s):
Exhibit: Short-Run Costs

-(Exhibit: Short-Run Costs) If the price declines, production will continue in the short run, even though the firm incurs a loss, between quantities:

Question

Use the following to answer question(s): 
Exhibit: Short-Run Costs
 
-(Exhibit: Short-Run Costs) If the price declines, production will continue in the short run, even though the firm incurs a loss, between quantities:

Quizplus · Accepted Answer

In the short run, producers will continue to produce even if price is below average variable cost as long as price covers average variable cost. In the exhibit, price covers average variable cost between quantities Q and R. Thus, production will continue between quantities Q and R even if the firm incurs a loss. However, if price falls below average variable cost at quantity R, the firm will shut down production in the short run.

Use the Following to Answer Question(s)