In which market structure will a firm choose not to shut down when price is less than average variable cost?

Question

Quizplus · Accepted Answer

In all market structures, firms may choose not to shut down immediately when price is less than average variable cost (AVC) due to various strategic or operational reasons, such as expectations of future price increases or the presence of sunk costs. However, the statement as phrased incorrectly suggests that firms will always shut down when P < AVC, which is not accurate. Firms often consider other factors beyond immediate price and cost comparisons.

In Which Market Structure Will a Firm Choose Not to Shut