Choose the situation that matches the concept. The price at which the firm will

Question

Choose the situation that matches the concept.

The price at which the firm will not produce any output in the short run.

Select one or more:

a. The price is assiciated with the minimum of marginal cost (MC).

b.  The price is assiciated with the intersection of marginal cost and average variable cost (AVC).

c.  The price is assiciated with the intersection of marginal cost and average total cost (ATC).

d.  The price is assiciated with the minimum of average variable cost (AVC).

e.  The price is assiciated with the minimum of average total cost (ATC).

Choose the situation that matches the concept The price at which the firm will not produce any output in the short run. Select one or more: a. The price associated with the minimum of marginal cost (MC) b. The price associated with the intersection of marginal cost and average variable cost (AVC). c. The price associated with the intersection of marginal cost and average total cost (ATC). d. The price associated with the minimum of average variable cost (AVC) e. The price associated with the minimum of average total cost (ATC).

Explanation / Answer

Solution: The price is associated with the minimum of average variable cost (AVC).

Explanation: In the short run the price at which firm will not produce any output at the price is found by finding the price associated with the minimum of average variable cost (AVC). When AVC function is linear, and then in short-run price will be the intercept price of the AVC function.

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