A price- taking firm in the short run should not produce any level of output unless

Question

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In the short run, a price-taking firm should only produce if its average revenue (which is equal to the price) is greater than or equal to its average variable cost. This is because if the firm produces any output, it can at least cover its variable costs and avoid immediate losses. However, if the price is lower than the average variable cost, the firm would be better off shutting down and not producing anything, as producing would result in losses greater than not producing at all.

A Price- Taking Firm in the Short Run Should Not