In the Short Run, a Perfectly Competitive Firm Will Shut

question 55

Multiple Choice

In the short run, a perfectly competitive firm will shut down if

• A) it incurs any economic loss.
• B) price equals average cost.
• C) total revenue is less than total variable cost.
• D) total revenue is less than total fixed cost.

---

Definitions:

Lawn-mowing

The act of cutting the grass of a lawn to maintain its appearance and health.

Perfectly Competitive

A market structure where there are many buyers and sellers, all of whom have negligible impact on the market price.

Marginal Cost

The increment in total spending due to the manufacture of one more unit of a product or service.

Fixed Cost

Fixed Cost is a business expense that does not change with the level of goods or services produced within a certain period.