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- Subject
- Costs , Supply And Perfect Competitioneconomics-mcqs › costs-supply-and-perfect-competition
- Published
- 2 Jun 2019
- Last updated
- 28 May 2026
Under perfect competition, when will a firm continue to operate in the short term?
Multiple choice question for Costs , Supply And Perfect Competition. Select an option, then review the explanation below.
Explanation
In the short run, a perfectly competitive firm will keep producing as long as the price at least covers the average variable cost. If the price falls below this level, the firm would minimize losses by shutting down. Covering fixed costs is not necessary in the short run since they are sunk costs.
More Costs , Supply And Perfect Competition MCQs
Practice related questions from the same subject.
- 1.In the context of a perfectly competitive firm, what represents its short-run supply curve and its long-run supply curve respectively?
- 2.Under what condition will a firm cease production and produce nothing in the short term?
- 3.In the short run, the average total cost is composed of which two components?
- 4.What is the relationship between marginal cost and average cost when the average cost is decreasing and when it is increasing?
- 5.What does it indicate when the long-run average cost curve slopes downward from left to right?