Lenore operates a tool rental firm and will earn a profit in the short run when she produces the profit-maximizing quantity and the price is:
A)greater than marginal cost.
B)less than marginal cost.
C)less than variable cost.
D)greater than average cost.

Question

Quizplus · Accepted Answer

In the short run, a firm earns a profit when the price is greater than the average cost, as this means the firm is covering all its costs and making a profit on each unit sold.

Lenore Operates a Tool Rental Firm and Will Earn a Profit