In the short run, a firm will produce a positive amount of output as long as

Question

Quizplus · Accepted Answer

In the short run, a firm will produce a positive amount of output as long as price (P) is greater than average variable cost (AVC) at some output level. This is because in the short run, a firm is able to adjust its output to minimize losses or maximize profits, by producing at an output level where P > AVC. If P is less than AVC at all output levels, the firm will shut down and produce zero output. If P is greater than AVC but less than average total cost (ATC), the firm will still produce output but may incur losses. Therefore, choice A is correct.

In the Short Run, a Firm Will Produce a Positive