In deciding whether to operate in the short run, the firm must consider the relationship between price and
A)total cost.
B)average variable cost.
C)total fixed cost.
D)the number of buyers.

Question

Quizplus · Accepted Answer

In the short run, a firm will continue to operate as long as the price it receives for its product is greater than or equal to its average variable cost. This is because, in the short run, fixed costs are sunk and cannot be recovered, so the firm focuses on covering its variable costs.

In Deciding Whether to Operate in the Short Run, the Firm