In the long run, a firm should shut down if it cannot cover its average total costs.

Name: In the long run, a firm should shut down if it cannot cover its average total costs.
Brand: Quizplus
Rating: 4.8 (40 reviews)

Question

Quizplus · Accepted Answer

In the long run, a firm's average total costs represent the minimum average cost at which it can produce a given output. If a firm cannot cover its average total costs, it means that it is losing money on every unit it produces. In the long run, this is unsustainable, and the firm will eventually have to shut down.

In the Long Run, a Firm Should Shut Down If