Question

When a perfectly competitive firm makes a decision to shut down it is most likely that?

Answer 1

Explanation:

When a completely competitive firm makes a decision to shut down, it’s most likely that the price of the commodity being produced falls below the firm’s standard variable cost. A firm will decide to shut down its operations when the revenue received from the sale of goods is not able to cover the variable costs of the firm. In this situation, the firm would incur more loss if it continues its production than if it decides to shut down its operations.