Technically speaking, if price AVC, then
A) TR TC
B) profit is positive
C) TR TVC
D) profit is negative
E) the firm should shut down

Question

Technically speaking, if price > AVC, then
A) TR > TC
B) profit is positive
C) TR > TVC
D) profit is negative
E) the firm should shut down

Quizplus · Accepted Answer

When price is greater than average variable cost (AVC), it means that the total revenue (TR) is greater than total variable cost (TVC), because the firm is covering more than its variable costs per unit. This does not necessarily mean that total revenue is greater than total cost (TC), that profit is positive, that profit is negative, or that the firm should shut down.

Technically Speaking, If Price > AVC, Then