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7 May, 20:12

A firm operating in a perfectly competitive industry will continue to operate in the short run but earn losses if the market price is less than that firm's average total cost but greater than the firm's average variable cost. A. TrueB. False

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  1. 7 May, 20:37
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    Answer: Yes it is true, A firm operating in a perfectly competitive industry will continue to operate in the short run but earn losses if the market price is less than that firm's average total cost but greater than the firm's average variable cost

    Explanation:

    Perfect competition is one in which there are a large number of buyers and sellers and neither buyers nor sellers have any control over price. In short-run, the price is less than the average total cost. The average total cost is equal to the average variable cost+average fixed cost.

    A firm continues to operate in the short run if it suffers losses. It tries to cover the average variable cost. But it has to pay the fixed cost.
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