Explain why a firm should continue to operate in the short run so long as market price is greater the the firm's average variable cost at the profit-maximizing level of output
What will be an ideal response?
So long as market price is greater than average variable cost at the profit-maximizing level of output, the firm's total revenues will be greater than its total variable costs. Thus, the firm will be able to pay all of its variable costs and have some amount of money left over to pay part of its fixed costs. If the firm decided to shut down it would have to pay all of its fixed costs out of pocket. This amount is clearly greater than the loss it incurs if it continues to operate.
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The idea that there is no voting system that can consistently make a fair choice among three or more candidates is a conclusion of
A) Arrow's impossibility theorem. B) the Condorcet paradox. C) the Voting Rights Act of 1965. D) the median voter theorem.
To determine the price elasticity of demand, we
A) need information on consumers' incomes. B) need to know how much is available. C) compare the percentage change in the quantity demanded to the percentage change in the price. D) compare the change in the quantity to the change in price. E) divide the quantity by the price.