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andreev551 [17]
2 years ago
6

A firm sells a product in a purely competitive market. The marginal cost of the product at the current output is $5.00 and the m

arket price is $5.00. What should the firm do
Business
1 answer:
Rufina [12.5K]2 years ago
5 0
  • Shut down, if the minimum possible average variable cost is $5

In the purely competitive market majority of the producers is price taker as there are many sellers of the same homogenous product. When in the situation of Marginal Cost (MC) of product at the current rate of production is equal to the market price. This shows that the firm isn’t in profit, it is selling at which they are producing. So, the Average Variable Cost AVC of product at this level indicates the shutdown of the firm production.

For the questions related to the competitive Market visit the link:

brainly.com/question/15410678

#SPJ4

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