When price is sufficient to cover average variable cost,firms suffering short-run losses should shut down.

Name: When price is sufficient to cover average variable cost,firms suffering short-run losses should shut down.
Brand: Quizplus
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Question

Quizplus · Accepted Answer

When price covers average variable cost, the firm can cover its variable costs plus contribute something towards fixed costs, so it should continue operating in the short run to minimize losses. Shutting down is considered if the price doesn't even cover the average variable cost.

When Price Is Sufficient to Cover Average Variable Cost,firms Suffering