Question

When determining whether to shut down in the short run, a competitive firm should ignore"?

Answer 1

In the short run, the firm should continue to produce because price is greater than average variable cost. results in allocative efficiency because firms produce where price equals marginal cost.

Answer 2

Explanation:

the average variable cost curve help a firm know whether it should shut down immediately If the entire average variable costs curve is higher than the price, then there is no output capable of producing profits or resulting in a loss less than the fixed costs and the firm should shut down.