If the price exceeds the average variable cost but is less than the average total cost, a firm
A)should further differentiate its product.
B)should stay in business for a while longer until its fixed costs expire.
C)is making some profit but less than maximum profit.
D)should shut down.

Question

Quizplus · Accepted Answer

The firm is covering its variable costs and part of its fixed costs, so it should continue operating in the short run to minimize losses until fixed costs expire.

If the Price Exceeds the Average Variable Cost but Is