When a perfectly competitive firm decides to shut down, it is most likely that Group of answer choices marginal cost is above average variable cost. marginal cost is above average total cost. fixed costs exceed variable costs. price is below the firm’s average variable cost

When a perfectly competitive firm decides to shut down, it is most likely that Group of answer choices marginal cost is above average variable cost. marginal cost is above average total cost. fixed costs exceed variable costs. price is below the firm’s average variable cost

Micro Economics For Today

10th Edition

ISBN:9781337613064

Author:Tucker, Irvin B.

Publisher:Tucker, Irvin B.

Chapter8: Perefect Competition

Section: Chapter Questions

Problem 10SQP

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Question 4

When a perfectly competitive firm decides to shut down, it is most likely that

Group of answer choices

marginal cost is above average variable cost.

marginal cost is above average total cost.

fixed costs exceed variable costs.

price is below the firm’s average variable cost.

Definition Definition Measure of the cost of production per unit of output, including only variable costs such as wages, materials, and utilities. AVC is calculated by dividing total variable cost by the number of units produced. Understanding average variable cost is important for businesses to make decisions on pricing, production levels, and profitability.

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