In the short run, a purely competitive seller will shut down if product price
A)equals average revenue.
B)is greater than MC.
C)is less than AVC.
D)is less than ATC.

Question

Quizplus · Accepted Answer

In the short run, a purely competitive seller will shut down if the product price is less than the average variable cost (AVC). This is because, at prices below AVC, the firm cannot cover its variable costs, and it would minimize its losses by ceasing production.

In the Short Run, a Purely Competitive Seller Will Shut