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Yesterday, 01:40

If a perfectly competitive firm finds that price is less than average variable cost, it should: shut down immediately. increase output until price equals marginal cost. decrease output until price equals marginal cost. not adjust output if marginal cost equals price.

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  1. Yesterday, 01:49
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    Answer: It should shot down immediately.

    Explanation:

    If the market price is equal to average cost at the profit-maximizing level of output, then the firm is making zero profits. If the market price that a perfectly competitive firm faces is below average variable cost at the profit-maximizing quantity of output, then the firm should shut down operations immediately.
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