Is my answer correct? i think you need information about the AVC to answer this question. I know the firm is productive at a loss, but in order to decide whether or not the firm should shut down, you have to know whether or not price is above or below AVC, right? In the short-run, if P< ATC, a perfectly competitive firm shoulda. shut down.O b. continue producing at a profit.O c. increase production to the output level at which P = ATC.O d. There is not enough information to answer the question.e. continue producing at a loss.

Average variable cost refers to the per unit variable cost that a producer has to pay to the factors…

Is my answer correct? i think you need information about the AVC to answer this question. I know the firm is productive at a loss, but in order to decide whether or not the firm should shut down, you have to know whether or not price is above or below AVC, right?

Is my answer correct? i think you need information about the AVC to answer this question. I know the firm is productive at a loss, but in order to decide whether or not the firm should shut down, you have to know whether or not price is above or below AVC, right?

Micro Economics For Today

10th Edition

ISBN:9781337613064

Author:Tucker, Irvin B.

Publisher:Tucker, Irvin B.

Chapter8: Perefect Competition

Section: Chapter Questions

Problem 5SQP

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Is my answer correct?

i think you need information about the AVC to answer this question. I know the firm is productive at a loss, but in order to decide whether or not the firm should shut down, you have to know whether or not price is above or below AVC, right?

In the short-run, if P< ATC, a perfectly competitive firm should
a. shut down.
O b. continue producing at a profit.
O c. increase production to the output level at which P = ATC.
O d. There is not enough information to answer the question.
e. continue producing at a loss.

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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