Question

In the short run, a perfectly competitive firm will always shut down if total revenue is ____ at all positive output levels. less than total cost less than total cost but greater than variable cost less than total cost but greater than fixed cost greater than fixed cost

Answer 1

Answer:

None of the options is correct.

Explanation:

In a perfectly competitive market a company will shut down in the short run if its product's price is less than the variable cost (total revenue is less than total variable costs).

Since all the companies are price takers in a perfectly competitive market, then the company cannot increase their prices, so they will temporarily shut down until the equilibrium price increases above its variable cost.