Download App

MICROECONOMICS CH : 10 PRODUCER'S EQUILIBRIUM — Economics STD 11 Commerce — Question

CBSE BoardEnglish MediumSTD 11 CommerceEconomicsMICROECONOMICS CH : 10 PRODUCER'S EQUILIBRIUM2 Marks
Question
Why should price (AR) be at least equal to average variable cost (AVC) for a firm to undertake production?
✓

Answer

This is because a firm must cover at least its variable costs while undertaking production of a commodity. It would be totally an irrational act of the producer to get into a situation when AR $<$ AVC.

Need a full question paper?

Generate a complete, print-ready paper with questions like this in minutes — across 16+ boards, with answer keys.

Start Generating Free

Explore more

More "2 Marks Question" from MICROECONOMICS CH : 10 PRODUCER'S EQUILIBRIUM→MICROECONOMICS CH : 10 PRODUCER'S EQUILIBRIUM — all question types→Economics STD 11 Commerce question papers→CBSE Board STD 11 Commerce question papers→CBSE Board question paper generator→

Similar questions

What are the average fixed cost, average variable cost and average cost of a firm? How are they related?
→
When do we say there is excess demand for a commodity in the market?
→
Does long period TC curve starts from the origin?
→
What will be the impact of increase in import of software goods to India (assuming domestic supply remains unaffected) on equilibrium price and quantity of software goods in India?
→
Elasticity of demand is generally high during the long period compared to the short period. Why?
→
How does the imposition of a unit tax affect the supply curve of a firm?
→
Why is the total revenue curve of a price taking firm an upward sloping straight line? Why does the curve pass through the origin?
→
Do you agree that an intelligent producer can avoid the occurrence of diminishing returns to a factor even with the existing technology?
→
Firm's supply curve shows its supply function.' Defend or refute the given statement.
→
What is the relation between Good-X and Good-Y, if with rise in the price of Good-X, demand for Good-Y rises? Give an example.
→