In the short run, a perfectly competitive firm will always shut down if total revenue is ____ at all positive output levels.
A) less than total cost
B) less than total cost but greater than variable cost
C) less than total cost but greater than fixed cost
D) greater than fixed cost
E) less than variable cost

Question

Quizplus · Accepted Answer

In the short run, a perfectly competitive firm will shut down if total revenue is less than variable cost because it cannot cover its variable costs, leading to losses greater than its fixed costs.

In the Short Run, a Perfectly Competitive Firm Will Always