In the short run, a purely competitive seller will shut down if
A)it cannot produce at an economic profit.
B)price is less than average variable cost at all outputs.
C)price is less than average fixed cost at all outputs.
D)there is no point at which marginal revenue and marginal cost are equal.

Question

Quizplus · Accepted Answer

In the short run, a purely competitive seller will shut down if the price is less than the average variable cost at all outputs. This is because the firm would not be able to cover its variable costs, making continued operation financially unsustainable in the short term.

In the Short Run, a Purely Competitive Seller Will Shut