A firm realizes that the market price has fallen below its average total costs,and it is now earning a loss.What is the best action for the firm to take in the short run?
A) Produce where MC = MR to minimize losses if P > AVC.
B) Shut down if price is greater than average variable costs.
C) Produce where MC = MR to minimize losses if P < AVC.
D) Shut down if total revenue is less than fixed costs.
Correct Answer:
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