If price is less than the average variable cost,firms that seek to maximize profit should shut down.

Name: If price is less than the average variable cost,firms that seek to maximize profit should shut down.
Brand: Quizplus
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Question

Quizplus · Accepted Answer

If the price is less than the average variable cost, the firm is not making enough revenue to cover its variable costs. In this situation, continuing to operate would result in losses that would reduce profit. Therefore, the firm should shut down in order to minimize its losses.

If Price Is Less Than the Average Variable Cost,firms That