The shut down condition - the point where the company finds it is no longer viable to produce and sell a product - for a competitive firm is where price is:
A) less than marginal revenue.
B) less than short run average total cost.
C) greater than marginal revenue.
D) less than average variable cost.

Question

Quizplus · Accepted Answer

A competitive firm will shut down in the short run if the price is less than the average variable cost, as it cannot cover its variable costs, leading to losses greater than its fixed costs.

The Shut Down Condition - the Point Where the Company