A perfectly competitive firm is currently producing where price is $8 and both marginal cost and average variable cost are $9.To maximize profit or minimize loss in the short run, this firm should

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The firm is currently experiencing a loss because its average variable cost is greater than the price it receives for its output. In the short run, it is best for the firm to minimize its losses by shutting down, since its fixed costs would still have to be paid if it continued to operate. By shutting down, it would incur a loss equal to its fixed costs, but this loss would be smaller than the loss it would incur by continuing to produce at a price that is below its average variable cost.

A Perfectly Competitive Firm Is Currently Producing Where Price Is