If, at its profit-maximizing output level, the price of the good is less than average variable cost, the firm should shut down immediately.

Name: If, at its profit-maximizing output level, the price of the good is less than average variable cost, the firm should shut down immediately.
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Question

Quizplus · Accepted Answer

At the profit-maximizing output level, if the price is less than the average variable cost, the firm cannot cover its variable costs, and continuing production would lead to greater losses than shutting down immediately.

If, at Its Profit-Maximizing Output Level, the Price of the Good