When should a competitive firm consider shutting down its operations?

CA Foundation · Business Economics · PYQS · September 2024
When should a competitive firm consider shutting down its operations?
(A) A. When the price is below Average Variable Costs (AVC).
(B) B. When the price is above Total Variable Costs (TVC).
(C) C. When the price is equal to Total Revenue (TR).
(D) D. When the price is constant.

Suggested Answer and Working Notes:

Correct Answer: Option (A)

A. When the price is below Average Variable Costs (AVC).

Topics: Theory of Production and Cost

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