In the short run, a firm must consider its ______ when deciding whether to shut down production.

Question

Quizplus · Accepted Answer

In the short run, a firm must consider its average variable costs when deciding whether to shut down production. If the price it can get for its product is less than its average variable costs, the firm cannot cover these costs and should shut down to minimize losses. Fixed costs are not considered in this decision because they must be paid whether the firm is operating or not.

In the Short Run, a Firm Must Consider Its ______