In the short run,if P

Question

In the short run,if P < AVC at the quantity where MR = MC and fixed cost is greater than zero,a perfectly competitive firm produces _____ and takes an economic _____.

Quizplus · Accepted Answer

In the short run, if the price (P) is less than the average variable cost (AVC) at the quantity where marginal revenue (MR) equals marginal cost (MC), a perfectly competitive firm will not produce any output because it cannot cover its variable costs. Despite having fixed costs greater than zero, the firm takes an economic loss by not producing, as producing would only increase its losses.

In the Short Run,if P < AVC at the Quantity