A profit-maximizing firm in monopolistic competition should shut down in the short run
A)if marginal revenue is less than price
B)if price is always less than average total cost
C)if price is always less than average fixed cost
D)if price is always less than average variable cost
E)under no circumstances

Question

Quizplus · Accepted Answer

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

A Profit-Maximizing Firm in Monopolistic Competition Should Shut Down in the Short