PPSCFPSCNTSPakistan govt jobs
- Subject
- Costs , Supply And Perfect Competitioneconomics-mcqs › costs-supply-and-perfect-competition
- Published
- 2 Jun 2019
- Last updated
- 28 May 2026
Under what condition will a firm cease production and produce nothing in the short term?
Multiple choice question for Costs , Supply And Perfect Competition. Select an option, then review the explanation below.
Explanation
A firm will stop producing in the short run if the market price is lower than the short-run average variable cost, as continuing production would lead to greater losses than shutting down. If the price is above average variable cost, the firm will continue to produce even if profits are negative, because it can cover some fixed 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.In the short run, the average total cost is composed of which two components?
- 3.What is the relationship between marginal cost and average cost when the average cost is decreasing and when it is increasing?
- 4.What does it indicate when the long-run average cost curve slopes downward from left to right?
- 5.Which characteristic best describes a monopoly market structure?