If, at the output where marginal revenue equals marginal cost, price is below average variable cost, a firm will shut down in the short run.

Name: If, at the output where marginal revenue equals marginal cost, price is below average variable cost, a firm will shut down in the short run.
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Question

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When price falls below average variable cost, the firm cannot cover its variable costs, leading to a decision to shut down in the short run to minimize losses.

If, at the Output Where Marginal Revenue Equals Marginal Cost