The short-run shutdown rule is to shut down if:

Name: The short-run shutdown rule is to shut down if:
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Question

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The short-run shutdown rule is to shut down if the price (P) is less than the average variable cost (AVC) at the quantity produced. This is because if the price is less than AVC, the firm is not covering its variable costs, and continuing to operate would lead to further losses. Therefore, the best choice is B.

The Short-Run Shutdown Rule Is to Shut Down If