If a perfectly competitive firm in the short run can sell its output at $2.50 per bushel and it has an average variable cost of $2.75 per bushel and a marginal cost of $2.50 per bushel,it should

Question

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Since the average variable cost ($2.75) is higher than the price ($2.50), the firm is not covering its variable costs and should cut output to zero to minimize losses.

If a Perfectly Competitive Firm in the Short Run Can