A firm will not produce in a competitive industry if:
A)price is less than short run SAC.
B)profit is negative.
C)price is less than SMC.
D)price is less than short run SAVC.

Question

Quizplus · Accepted Answer

A firm in a competitive industry will not produce if the price is less than the short-run average variable cost (SAVC), as it would not cover the variable costs of production, leading to a situation where shutting down temporarily minimizes losses.

A Firm Will Not Produce in a Competitive Industry If