Question:

If a perfectly competitive firm's price is less than average total cost but greater than average variable cost

by Guest59939  |  earlier

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the firm

1. is breaking even

2. is incurring a loss

3. should shut down

4. is earning a profit

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  1. 2. incurring a loss.

    but if its below both the atc and avc curve the firm should shut down.


  2. 2. is incurring a loss

    It will continue operations in short-run but will shut-down in long-run.
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