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When a perfectly competitive firm decides to shut down, it is most likely that
a. marginal cost is above average variable cost.
b. marginal cost is above the average total cost.
c. price is below the firm's average variable cost.
d. fixed costs exceed variable costs

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Divya Singh
Divya SinghLv10
26 Oct 2020
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Related questions

In the short-run, a profit-maximizing monopolistically competitive firm sets its price:

A. equal to marginal revenue.
B. equal to marginal cost.
C. above marginal cost.
D. below marginal cost.

Suppose Robin's Clock Works produces in a perfectly competitive market. Suppose the average total cost of clocks is $95, the average variable cost of clocks is $90, and the price of clocks is $85. If the firm is producing the level of output where marginal cost equals price, then in the short-run, the firm:

A) can increase profit by increasing output.
B) is earning a positive economic profit.
C) should continue to produce since total revenue exceeds the total variable cost.
D) should shut down.

A perfectly competitive firm will shut down immediately when the market price falls below
(a) average variable cost.(b) average total cost.(c) average fixed cost.(d) marginal cost.(e) None of the above.

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