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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Once the copyright on a book expires
A) no publisher can claim copyright of that author's words, but the book can be reissued by any publisher. B) only the first publisher to reissue the book can claim copyright of that author's words. C) any publisher can now claim copyright of that author's words. D) no publisher can claim copyright of that author's words because the book can never be reissued.
A tax cut
A. Indirectly increases the disposable income of consumers. B. Contains less fiscal stimulus than an increase in government spending of the same size. C. Shifts the AD curve to the left. D. Directly decreases the disposable income of consumers.
The effect on the market for heating oil of a leftward shift of supply would be
A. a shortage of heating oil. B. a surplus of heating oil. C. a decrease in the quantity of heating oil sold and in its price. D. an increase in the price of heating oil and a decrease in the quantity sold.
Temporary monopolies via the provision of sole ownership rights to profit from the production, use, or sale of a good are provided by:
A. profit-maximizing behavior. B. network externalities. C. patents and copyrights. D. natural monopolies.