If a perfectly competitive firm is producing a level of output where price is equal to marginal cost and greater than average variable cost, then it should cease production in the short run.

Question

Quizplus · Accepted Answer

In this scenario, the firm is covering its variable costs and contributing to fixed costs, so it should continue producing in the short run to minimize losses or potentially make a profit.

If a Perfectly Competitive Firm Is Producing a Level of Output