A profit-maximizing monopolist finds that if it remains open, the best output is 50 a week, but at this output it would make a loss. Under what circumstances should it shut down?
ایک منافع زیادہ کرنے والا اجارہ دار کب اپنا کاروبار بند کرے گا؟
- If MR at this output is below AVC
- If AR at this output is below SAC
- If AR at this output is below AVC
- None of these
Explanation
- A firm should shut down if Average Revenue (AR) is less than Average Variable Cost (AVC) because it cannot cover variable costs.
- In perfect competition or monopoly, AR = Price, so price < AVC is the shutdown rule.
Last verified on 22-04-2026
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