The Firm Will Continue to Produce in the Short Run

question 20

True/False

The firm will continue to produce in the short run if P <ATC and P > AVC.

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Definitions:

Positive Economic Profits

Earnings that exceed the total opportunity costs of all inputs, indicating a return above the normal profit level.

Expand

To increase in size, number, or importance, often relating to businesses aiming to grow through increased operations, product lines, or market reach.

Equilibrium

The condition that exists when quantity supplied and quantity demanded are equal. At equilibrium, there is no tendency for price to change.

Incentive

A factor, often financial, that motivates individuals or organizations to perform certain actions or behave in a desired way.