In the long run, a firm must shut down if its average revenue is
A. equal to the minimum average cost.
B. greater than average cost.
C. less than average variable cost.
D. equal to the average cost.
QandA LiberiaTeacher
In the long run, a firm must shut down if its average revenue is A. equal to the minimum average cost. B. greater than average cost. C. less than average variable cost. D. equal to the average cost.
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C is the correct answer because in the long run if the firm revenue cannot cover its variable costs of production, which is its every day production cost it is experiencing higher losses and technically not making profit anymore.