When will a profit-maximizing firm shut down in the short run

Name: When will a profit-maximizing firm shut down in the short run
Brand: Quizplus
Rating: 4.8 (52 reviews)

Question

Quizplus · Accepted Answer

A profit-maximizing firm will shut down in the short run when price is less than the average variable cost, as the firm will not even be able to cover its variable costs and will incur losses. If the firm shuts down, it incurs a loss equal to its fixed costs but avoids additional variable costs. Therefore, it will shut down and minimize its losses.

When Will a Profit-Maximizing Firm Shut Down in the Short