If at the MC = MR output, AVC exceeds price,
A)new firms will enter this industry.
B)the firm should produce the MC = MR output and realize an economic profit.
C)some firms should shut down in the short run.
D)the firm should expand its plant.

Question

Quizplus · Accepted Answer

When AVC exceeds price, it means the firm cannot cover its variable costs at the MC = MR output level, indicating a loss. In the short run, if a firm cannot cover its variable costs, it should consider shutting down to minimize losses.

If at the MC = MR Output, AVC Exceeds Price