Exhibit 22-4

-Refer to Exhibit 22-4. Where can you find the lowest price that will motivate the firm to produce Q₁ in the short run?

Question

Exhibit 22-4 -Refer to Exhibit 22-4. Where can you find the lowest price that will motivate the firm to produce Q₁ in the short run?

Quizplus · Accepted Answer

In the short run, a firm will continue to produce as long as it can cover its average variable costs (AVC). Therefore, the lowest price that will motivate the firm to produce in the short run is at the horizontal line running to "AVC," as it represents the minimum price at which the firm can cover its variable costs.

Exhibit 22-4 ​

Exhibit 22-4