In the summer of 2012, due to plentiful lobsters, the price of lobster in Maine fell to $1.25 a pound, which was 70% below normal and nearly a 30-year low. According to Bill Adler, head of the Massachusetts Lobstermen's Association, "Anything under $4 [a pound], lobstermen can't make any money" (Jerry A. Dicolo and Nicole Friedman, "Lobster Glut Slams Prices," Wall Street Journal, July 16, 2012). At least 30 boats announced that they would stay in port until the price rose. However, Canadian and other U.S. fishers continued to harvest lobsters. Why did some lobster boats stop fishing while others continued? Some boats stopped fishing in the short run while others continued fishing because (unlike the boats that continued fishing) the boats that stopped fishing

Explanation: Variable cost are cost that varies with production output the higher the output the more variable cost increase unlike marginal cost with increases cost the moment an additional unit is produced. The boats that stopped fishing experienced an increase in marginal and variable production cost due to the price not covering their variable cost this meant they were at risk of running at a loss.