A competitive firm should shut down if:

CA Foundation · Business Economics · PYQS · September 2025
A competitive firm should shut down if:
(A) A. Its total revenues are less than the total cost.
(B) B. Its total revenues are less than the marginal revenues.
(C) C. Its total revenues are less than the average variable cost.
(D) D. Its total revenues are less than the fixed cost.

Suggested Answer and Working Notes:

Correct Answer: Option (C)

C. Its total revenues are less than the average variable cost.

Topics: Price Determination in Different Markets

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