In the short run, a competitive firm will always choose to shut down if product price is less than the lowest attainable average total cost.

Name: In the short run, a competitive firm will always choose to shut down if product price is less than the lowest attainable average total cost.
Brand: Quizplus
Rating: 4.8 (36 reviews)

Question

Quizplus · Accepted Answer

In the short run, a competitive firm will choose to shut down if the product price is less than the average variable cost, not the average total cost, because it cannot cover its variable costs.

In the Short Run, a Competitive Firm Will Always Choose