Asked by
Sidney Tinner
on Nov 16, 2024
Verified
A firm operating in a perfectly competitive industry will shut down in the short run but earn losses if the market price is less than that firm's average variable cost.
Average Variable Cost
The total variable costs divided by the quantity of output produced.
Perfectly Competitive
A market structure characterized by many buyers and sellers, identical products, and free entry and exit, leading to price determination by supply and demand.
Market Price
The ongoing value for buying or selling a product or service in the free market.
- Gain insight into the fundamentals governing the closure and withdrawal of enterprises over short and prolonged periods.
Verified Answer
TR
Learning Objectives
- Gain insight into the fundamentals governing the closure and withdrawal of enterprises over short and prolonged periods.