BEP & Shutdown Point Perfect Competition

In a perfectly competitive market, a firm will continue producing in the short run if:

• Price > ATC

• Price > AVC

• Price < ATC

• MR = 0

What happens when marginal cost (MC) is below marginal revenue (MR)?

• The firm is maximizing profit

• The firm should reduce output

• The firm is operating efficiently

• The firm should increase output

• The firm should shut down

A firm produces at a point where MR = MC, but ATC > P. What is the firm's condition?

• Normal profit

• Loss minimizing

• Shutdown

• Break-even

• Supernormal profit

Which condition leads a firm to keep operating despite making losses?

• TR > AVC

• P < ATC

In short-run perfect competition, firms adjust output based on:

• MR and ATC

• MC and AVC

• MR and MC

• TR and TC

• Demand and supply

The break-even point is achieved when:

• TR = TVC

• TR = TC

• TR > TC

• TR < MC

• TR > TVC

The shutdown point occurs when:

• TR = TC

• TR = TVC

• P = ATC

• MC = MR

• P > AVC

If the market price falls below AVC, the firm should:

• Continue production

• Increase output

• Shut down in the short run

• Rebrand product

• Expand capacity

When a firm shuts down in the short run:

• Total cost becomes zero

• Variable cost becomes zero

• Fixed cost becomes zero

• Profit becomes zero

• Marginal cost becomes zero

Which is true at the shutdown point?

• TR > TVC

• TR = TVC

• TR = TC

• MR > MC

• AVC > ATC