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Microeconomics

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Price Below AVC

MICRO-JSL9EZ

If a firm finds that the market price for the good it produces is below its average variable cost (AVC), then it should

A

“shut-down” (i.e. produce $q=0$) in the short run.

B

“exit” (i.e. leave the market entirely) in the long run.

C

do both Choice 'A' and Choice 'B'.

D

do neither Choice 'A' or Choice 'B'.