Continuing supply chain problems mean that many firms are operating at reduced capacity. For example, auto manufacturers are operating their production lines at a slower rate because of a shortage in computer chips used in cars. Why might firms be willing to do, this, but only temporarily?

1. Marginal costs are lower when Q is lower, so the firm is happy to open

2. None of these make sense

3. Firms can cover their variable costs with lower capacity, so in the short run they stay open

4. Firms can cover their total costs with lower capacity, but they won't make

economic profit, so they will exit in the long run