Recall the Application about the break-even price for growing switchgrass, a perennial grass that is native to the U.S. plains states and is used to create biofuel, to answer the following question(s).
-Recall the Application. If the minimum average total cost for switchgrass farmers is $55 per ton and the minimum average variable cost is $40 per ton, then at a price of $50 per ton in the short run the switchgrass farmer will

Question

Quizplus · Accepted Answer

The price of $50 per ton is less than the minimum average total cost of $55 per ton, meaning the farmer is not covering all of their costs. However, it is greater than the minimum average variable cost of $40 per ton, meaning the farmer is covering their variable costs but not their fixed costs. In the short run, the farmer will continue to operate and produce switchgrass at a loss, rather than shutting down completely. Therefore, the switchgrass farmer will operate and lose money.

Recall the Application About the Break-Even Price for Growing Switchgrass