Lawn-mowing is a perfectly competitive industry.Alex's lawn-mowing service should shut down in the short run whenever his profits are negative.

Question

Quizplus · Accepted Answer

In a perfectly competitive industry, a firm should continue operating in the short run as long as it can cover its variable costs, even if it is making a loss, because shutting down would result in a loss equal to its fixed costs.

Lawn-Mowing Is a Perfectly Competitive Industry