Victor owns a shoe store that is losing money, and several other shoe stores in his market are also losing money. Which of the following guidelines will help him decide whether to remain in business or exit the market?
A)Remain in the market only if average costs are greater than average revenue.
B)Remain in the market only if average costs exceed marginal revenue.
C)Exit the market if price is expected to be less than average costs.
D)Exit the market if price is less than average revenue.

Question

Quizplus · Accepted Answer

Exit the market if the price is expected to be less than average costs, as this indicates the business cannot cover its costs in the long term, leading to unsustainable losses.

Victor Owns a Shoe Store That Is Losing Money, and Several