(Table) If the toy-making firm in the table faces a market price of $25 in the short run, it will
$\begin{array}{c}
\hline {\text { Costs for Toy-Making Firm }} \
\begin{array}{|c|c|c|c|c|}

\hline Q & \text { ATC } & \text { AVC } & \text { AFC } & \text { MC } \
\hline 0 & - & - & - & - \
\hline 8 & 93.75 & 31.25 & 62.50 & 31.25 \
\hline 17 & 58.82 & 29.41 & 29.41 & 27.78 \
\hline 27 & 46.30 & 27.78 & 18.52 & 25.00 \
\hline 40 & 37.50 & 25.00 & 12.50 & 19.23 \
\hline 54 & 32.41 & 23.15 & 9.26 & 17.86 \
\hline 66 & 30.30 & 22.73 & 7.58 & 20.83 \
\hline 76 & 29.61 & 23.03 & 6.58 & 25.00 \
\hline 84 & 29.76 & 23.81 & 5.95 & 31.25 \
\hline 91 & 30.22 & 24.73 & 5.49 & 35.71 \
\hline 96 & 31.25 & 26.04 & 5.21 & 50.00 \
\hline
\end{array}\end{array}$

Question

(Table) If the toy-making firm in the table faces a market price of $25 in the short run, it will
$\begin{array}{c}
\hline {\text { Costs for Toy-Making Firm }} \
\begin{array}{|c|c|c|c|c|}

\hline Q & \text { ATC } & \text { AVC } & \text { AFC } & \text { MC } \
\hline 0 & - & - & - & - \
\hline 8 & 93.75 & 31.25 & 62.50 & 31.25 \
\hline 17 & 58.82 & 29.41 & 29.41 & 27.78 \
\hline 27 & 46.30 & 27.78 & 18.52 & 25.00 \
\hline 40 & 37.50 & 25.00 & 12.50 & 19.23 \
\hline 54 & 32.41 & 23.15 & 9.26 & 17.86 \
\hline 66 & 30.30 & 22.73 & 7.58 & 20.83 \
\hline 76 & 29.61 & 23.03 & 6.58 & 25.00 \
\hline 84 & 29.76 & 23.81 & 5.95 & 31.25 \
\hline 91 & 30.22 & 24.73 & 5.49 & 35.71 \
\hline 96 & 31.25 & 26.04 & 5.21 & 50.00 \
\hline
\end{array}\end{array}$

Quizplus · Accepted Answer

In the short run, a firm should continue to produce as long as the price covers the average variable cost (AVC). At a market price of $25, producing 76 toys results in the AVC being exactly $25, which is the lowest point where price equals AVC before it starts to exceed the market price, minimizing losses.

(Table) If the Toy-Making Firm in the Table Faces a Market