If the Price Received by a Perfectly Competitive Firm Is

question 163

Essay

If the price received by a perfectly competitive firm is less than its average variable cost, what will the firm do in the short run? Why?

---

Definitions:

Expectations Decrease

A reduction in the anticipated or desired outcomes, often leading to adjusted objectives or satisfaction levels.

Rough Order of Magnitude

An early estimate that gives a general sense of a project's size, cost, or duration, often with wide variances.

Ballpark Estimate

A rough approximation or preliminary calculation of cost or value, not intended to be exact but giving a general idea.

Risk Analysis

The systematic study and assessment of potential hazards that could impede achieving project or organizational goals, focusing on prevention and mitigation strategies.