Which of the following is not an option for a perfectly competitive firm that suffers short-run losses?
A)Shutting down
B)Reducing production
C)Reducing the use of variable factors
D)Raising price

Question

Quizplus · Accepted Answer

In perfect competition, firms cannot raise their price as they are price takers and have no control over the market price. Therefore, option D is not an option for a perfectly competitive firm that suffers short-run losses. The best choice for a firm in this situation is to shut down if their losses are greater than their fixed costs or to reduce production if their losses are less than their fixed costs. They may also consider reducing the use of variable factors, such as labor or materials, to lower their costs.

Which of the Following Is Not an Option for a Perfectly