-A firm will go out of business if price is below

Question

Quizplus · Accepted Answer

If price is below average total cost, the firm will be making losses on each unit it produces and sells, leading to a situation where it cannot cover its fixed costs and eventually shut down. However, if the price is above average total cost but below marginal cost, the firm may still operate in the short run, but will eventually be forced to shut down in the long run as it cannot cover all costs including fixed costs.

-A Firm Will Go Out of Business If Price Is