A profit-maximising firm's short-run shut down criterion is:

Name: A profit-maximising firm's short-run shut down criterion is:
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Question

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In the short-run, a profit-maximising firm will shut down if the price falls below the average variable cost. This is because the firm needs to cover its variable costs in order to minimise losses. If the price is less than the average variable cost, the firm will make a loss by producing and selling its output. Therefore, the best option is B.

A Profit-Maximising Firm's Short-Run Shut Down Criterion Is