Question

Complete the following sentence. In the short run, a perfectly competitive profit maximizing firm that has...

Complete the following sentence.
In the short run, a perfectly competitive profit maximizing firm that has not shut down when the price of the product is between

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Answer #1

Answer: Minimum average total cost(ATC) and minimum average variable cost(AVC).

In the short run, a perfectly competitive profit maximizing firm that has not shut down when the price of the product is between minimum average total cost(ATC) and minimum average variable cost(AVC).

The minimum point of the AVC curve is the shut down point in production. If the price falls below the minimum AVC, the firm will shut down its production. If the price is above the minimum AVC, the firm will continue its production even if it makes a temporary loss in short-run. So, in the short run, when the price of the product is between minimum ATC and minimum AVC, a perfectly competitive profit maximizing firm will not shut down its production.

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