Read the two statements and choose the correct option.
I. In the short run, a firm must cover at least its AVC to stay open.
II. In the long run, a firm must cover its whole AC to stay in the industry.

Only ICorrect answerYour answerOnly IICorrect answerYour answerBoth I and IICorrect answerYour answerNeither I nor IICorrect answerYour answer

Show the answer and explanation

CorrectNot quiteAnswer C

Correct answer: C

Both are true: short run, AVC is the bar; long run, all costs are variable, so AC is the bar.

Ten questions from Perfect Competition & Supply, at your own pace.

Ten questions from Perfect Competition & Supply, at your own pace.

Read the two statements and choose the correct option.I. In the short run, a firm must cover at least its AVC to stay open.II. In the long run, a firm must cover its whole AC to stay in the industry.