passwella.
Menu

WAEC Economics 2018 Question 21

Question 21

Market Structures

In the long-run, a firm must shut down if its average revenue is

  1. A.greater than average cost.
  2. B.less than average variable cost.
  3. C.equal to the minimum average cost.
  4. D.equal to the average cost.
Show the answer and explanation

Answer: B (less than average variable cost.)

Explanation

A firm that cannot even cover average variable cost must close; in the long run it needs AR at least equal to AC.