In the short run, a firm that is a price taker will stay in business as long as
A) price equals average revenue.
B) marginal revenue is greater than or equal to marginal cost.
C) price exceeds average variable cost.
D) price is less than average variable cost.

Question

Quizplus · Accepted Answer

In the short run, a price-taking 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 ensures that the firm can cover its variable costs and contribute something towards its fixed costs, minimizing losses.

In the Short Run, a Firm That Is a Price