All of the following conditions are consistent with a firm's decision to shut down: TR

Name: All of the following conditions are consistent with a firm's decision to shut down: TR < VC,TR/Q < VC/Q,and P < MR.(TR = total revenue,VC = variable cost,Q = level of production,P = price,and MR = marginal revenue.)
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Question

All of the following conditions are consistent with a firm's decision to shut down: TR < VC,TR/Q < VC/Q,and P < MR.(TR = total revenue,VC = variable cost,Q = level of production,P = price,and MR = marginal revenue.)

Quizplus · Accepted Answer

The condition P < MR is not consistent with a firm's decision to shut down. A firm considers shutting down when price (P) is less than average variable cost (AVC), not when P is less than MR.

All of the Following Conditions Are Consistent with a Firm's