A perfectly competitive firm will continue producing in the short run as long as it can cover its _____ cost.

Question

Quizplus · Accepted Answer

In the short run, a perfectly competitive firm will continue to produce as long as it can cover its variable cost. This is because in the short run, fixed costs are sunk and cannot be recovered. Therefore, only variable costs are considered in decisions regarding whether to produce or shut down. As long as the firm can cover its variable costs, it is better off continuing to produce and earn some revenue, rather than shutting down and earning no revenue at all.

A Perfectly Competitive Firm Will Continue Producing in the Short