In order to continue its operations,in the long-run a firm must
A)Charge a price that is equal to its AVC
B)Charge a price that is equal to its AFC
C)Charge a price that is equal to its AVC + AFC
D)Need more information to determine the price

Question

Quizplus · Accepted Answer

In the long run, a firm must cover its total costs, which include both variable costs (AVC) and fixed costs (AFC). Therefore, the firm must charge a price that covers both AVC and AFC, which is equal to their sum (AVC + AFC). Thus, option C is the correct answer. Options A and B are incorrect because they only cover one type of cost, and the firm needs to cover both. Option D is incorrect because the necessary information is already provided.

In Order to Continue Its Operations,in the Long-Run a Firm