At the point at which P=MC, suppose that a perfectly competitive firm's MC = $100, its AVC = $80 and its AC = $110. This firm sh

Question

timama [110]

3 years ago

14

At the point at which P=MC, suppose that a perfectly competitive firm's MC = $100, its AVC = $80 and its AC = $110. This firm sh

ould

Business

1 answer:

kolezko [41] · Answer 1 · 2022-06-27T05:05:03+03:00

Answer: continue operating in the short run.

Explanation:

In the short run, at least one of the input that is used in the production of a good or service is fixed while the other inputs are variable.

A firm will continue to operate in the short run in a situation whereby the price is more than the average variable cost.

Since we've been told that P=MC, abd that the perfectly competitive firm's MC = $100, AVC = $80 and AC = $110, the firm should continue operating in the short run because the price ($100) is more than the AVC($80).