A perfectly competitive firm will be ________ if it operates at the minimum point on its average variable cost curve.
A) maximizing losses
B) operating at its shutdown point
C) minimizing profits
D) breaking even

Question

Quizplus · Accepted Answer

Operating at the minimum point on its average variable cost curve means the firm is covering its variable costs but not necessarily its fixed costs. This is known as the shutdown point, where the firm is indifferent between producing and shutting down since it's only able to cover variable costs, not make a profit.

A Perfectly Competitive Firm Will Be ________ If It Operates