In the short run,under what conditions should the firm shut down?
A) average total cost at the minimum point
B) price greater than average variable cost
C) price less than average variable cost
D) marginal revenue greater than marginal cost
E) marginal revenue greater than average total cost

Question

Quizplus · Accepted Answer

In the short run, if the price is less than the average variable cost, the firm should shut down. This is because the firm is not generating enough revenue to cover its variable costs, such as wages or raw materials, and is better off ceasing operations and minimizing losses in the short run.

In the Short Run,under What Conditions Should the Firm Shut