Consider the statement: "Even if a firm is losing money, it may be better to stay in business in the short run." This statement is true, if the loss is less than variable costs. false, because it could be better to stay in business in the long run. false, because a firm should only operate if it is making money. true, if the loss is less than fixed costs. b. The firm should produce in the short run as long as price is less than the average fixed cost. exceeds the average variable cost. is less than the average variable cost. exceeds the average fixed cost.

Two firms, a and b, each currently emit 100 tons of chemicals into the air. the government has decided to reduce the pollution and from now on will require a pollution permit for each ton of pollution emitted into the air. the government gives each firm 40 pollution permits, which it can either use or sell to the other firm. it costs firm a $200 for each ton of pollution that it eliminates before it is emitted into the air, and it costs firm b $100 for each ton of pollution that it eliminates before it is emitted into the air. after the two firms buy or sell pollution permits from each other, we would expect that firm a will emit a. 100 fewer tons of pollution into the air, and firm b will emit 20 fewer tons of pollution into the air. b. 20 more tons of pollution into the air, and firm b will emit 100 fewer tons of pollution into the air. c. 50 fewer tons of pollution into the air, and firm b will emit 50 fewer tons of pollution into the air. d. 20 fewer tons of pollution into the air, and firm b will emit 100 fewer tons of pollution into the air.