A perfectly competitive firm that should not shut down in the short run will maximize profit where

Question

Quizplus · Accepted Answer

In the short run, a perfectly competitive firm should not shut down if it can cover its variable costs. Therefore, option A is not correct. Similarly, option B is not relevant as fixed costs are not related to short-run decisions. Option E is incorrect since a firm cannot have zero average total cost in the short run.
Thus, the best option is D, where profit is maximized at the point where marginal cost equals price.

A Perfectly Competitive Firm That Should Not Shut Down in the Short