A manufacturing firm finds that the selling price of its product is below Average Total Cost (ATC) but above Average Variable Cost (AVC) in the…
CA Foundation · Business Economics · MTP · September 2026
A manufacturing firm finds that the selling price of its product is below Average Total Cost (ATC) but above Average Variable Cost (AVC) in the short run. According to the firm's behavioral principles, the most rational decision is to:
Suggested Answer and Working Notes:
Correct Answer: Option (B)
B. continue production because variable costs are fully covered and part of fixed costs is recovered.
Topics: Price Determination in Different Markets
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