The figure given below shows the aggregate demand and supply curves of a perfectly competitive market.Figure 10.7

-If the market price falls below the average-variable-cost, the firm will suspend production.

Question

The figure given below shows the aggregate demand and supply curves of a perfectly competitive market.Figure 10.7
 
-If the market price falls below the average-variable-cost, the firm will suspend production.

Quizplus · Accepted Answer

If the market price falls below the average-variable-cost, the firm will incur losses and will have to shut down production in the short run.

The Figure Given Below Shows the Aggregate Demand and Supply