If a firm is able to cover its variable costs by operating in the short run then,at its best output level,the
A)marginal revenue is equal to marginal cost
B)vertical distance between MR and MC is maximized
C)vertical distance between TR and TC is minimized
D)marginal cost curve lies above the marginal revenue curve
E)marginal cost curve is minimized

Question

Quizplus · Accepted Answer

If a firm is able to cover its variable costs, it means that it is generating sufficient revenue to cover its variable costs and some portion of its fixed costs. Therefore, the best output level that a firm can produce will be the point where its marginal revenue (MR) is equal to its marginal cost (MC), as this will enable the firm to generate the highest possible profits in the short run. At this point, the firm will be able to cover both its variable and fixed costs and make some surplus profits as well. Hence, choice A is the correct answer. The other answer choices are incorrect as they do not directly relate to the given scenario.

If a Firm Is Able to Cover Its Variable Costs