True, false, explain

Accounting Dec 07, 2020

True, false, explain. In the short-run, firms choose output level to minimize their short-run average cost.

Expert Solution

The given statement is false. In the short run, firms choose the output that maximizes their profit. This can be achieved by setting the marginal cost (MC) equal to the marginal revenue (MR). However, the level of output reached under this condition does not necessarily go hand in hand with the minimization of short-run average cost. This cost is minimized when the marginal cost (MC) equals the average total cost (ATC).

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