The firm will shut down in the short run if

Name: The firm will shut down in the short run if
Brand: Quizplus
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Question

Quizplus · Accepted Answer

In the short run, the firm should shut down if the price falls below its minimum AVC (average variable cost) because it would not be able to cover its variable costs, which include expenses such as wages, raw materials, and utilities. Continuing to operate under these circumstances would result in losses that are greater than if the firm were to shut down.

The Firm Will Shut Down in the Short Run If