In a perfectly competitive market,the market price is $8.An individual firm is producing the output at which MC = $8.AVC at that output is $10.What should the firm do to maximize its economic profit in the short run?

Question

Quizplus · Accepted Answer

Since the market price of $8 is below the firm's average variable cost of $10 at the current output level, the firm is making a loss. Therefore, in the short run, the firm should shut down and minimize its losses.

In a Perfectly Competitive Market,the Market Price Is $8