A profit- maximising firm would shut down in the short run when:
A) marginal revenue is less than marginal cost
B) average revenue is less than average cost
C) total revenue is less than total cost
D) average revenue is less than average variable cost

Question

Quizplus · Accepted Answer

A firm will shut down in the short run if average revenue is less than average variable cost, as it cannot cover its variable costs and would minimize losses by ceasing production.

A Profit- Maximising Firm Would Shut Down in the Short