Suppose the price of a product is less than its average variable cost. When the firm's fixed obligations are completely ended, it will now most likely:

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If the price of a product is less than its average variable cost, the firm is already incurring losses. When the fixed obligations are over, the firm will no longer have any reason to continue producing if it is not able to cover the variable costs. Continuing production would lead to further losses and bankruptcy, so the most likely outcome is that the firm will go out of business.

Suppose the Price of a Product Is Less Than Its