Suppose ABC Corp.is a firm producing newsprint in a perfectly competitive industry.We have the following information about the firm's production: - output (Q)= 1500 tonnes per month
- average total cost (ATC)= $627 per tonne
- average variable cost (AVC)= $614 per tonne
- marginal revenue (MR)= $620 per tonne
- marginal cost (MC)= $620 per tonne In the short run,this firm should

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In the short run, a perfectly competitive firm should continue production as long as the price (which is equal to marginal revenue) is greater than or equal to the average variable cost. In this case, the marginal revenue ($620 per tonne) is greater than the average variable cost ($614 per tonne), so the firm should continue to produce at the current level. While the price is lower than the average total cost, which means the firm is making a loss, it is still better for the firm to continue producing and minimize losses, rather than shut down and incur fixed costs without any revenue.