In order to continue operating, in the long-run a firm must a. Charge a price equal to its AVC b. Charge a price equal to its AFC c. Charge a price equal to its AC d. None of the above

Question

Humberto Rivers

Business

31 December, 12:52

In order to continue operating, in the long-run a firm must a. Charge a price equal to its AVC b. Charge a price equal to its AFC c. Charge a price equal to its AC d. None of the above

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Dixon · Answer 1

The answer is option A)

In order to continue operating, in the long-run a firm must A) Charge a price equal to its AVC

Explanation:

In order to continue operating, in the long-run a firm must charge a price equal to its Average Variable cost AVC.

This is because, a long run is a period of time in which all factors of production and costs are variable.

Over the long run, a firm will search for the production technology that allows it to produce the desired level of output at the lowest cost. If a company is not producing at its lowest cost possible, it may lose market share to competitors that are able to produce and sell at minimum cost.