Discuss the following questions. a. Why must price cover AVC if firms are to continue to operate?
Question:
a. Why must price cover AVC if firms are to continue to operate?
b. If the firm is covering its AVC but not all its fixed costs, will it continue to operate in the short run? Why or why not?
c. Why is it possible for price to remain above the average total cost in the short run but not in the long run?
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a Price must cover AVC or firms will lose more by operating than by shutting down Producing output w...View the full answer
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