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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
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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.

User Zahra Mirzaei
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1 Answer

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Answer: It should shot down immediately.

Step-by-step 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.

User Tsragravorogh
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