Question

in the short run, a firm should shut down its business if price is less than: a. avc. b. ar. c. mc. d. atc.

Explanation:

In short-run microeconomics, a firm's shutdown rule states that if the market price falls below the average variable cost (AVC), the firm cannot cover even its variable costs by operating, so it minimizes losses by shutting down. AR (average revenue) equals price in competitive markets, MC (marginal cost) is the cost of producing one more unit, and ATC (average total cost) relates to long-run exit decisions, not short-run shutdown.

Answer:

a. AVC.