A firm will not shut down in the short run as long as at the point where MR = MC

Question

Quizplus · Accepted Answer

In the short run, a firm will continue to operate as long as it can cover its variable costs. This means that the firm will not shut down if the price (P) is greater than the average variable cost (AVC) at the point where marginal revenue (MR) equals marginal cost (MC). Therefore, the correct answer is A.  However, it is important to note that while the firm will continue to operate in the short run, if the price is less than the average total cost (ATC), the firm will be making a loss.

A Firm Will Not Shut Down in the Short Run