The perfectly competitive firm will shut down in the short run if price is

Question

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In the short run, a perfectly competitive firm will shut down if the price is less than the average variable cost. This is because the firm is not able to cover its variable costs, and continuing to operate would only result in further losses. If the price is greater than the average variable cost but less than the average total cost, the firm will continue to operate in the short run but will not be able to make a profit. Only if the price is equal to or greater than the average total cost will the firm be able to make a profit in the short run. However, in the long run, firms that cannot make a profit will exit the market, resulting in a higher market price that may enable remaining firms to make a profit.

The Perfectly Competitive Firm Will Shut Down in the Short