Suppose that when a perfectly competitive firm produces 500 units of output a day, it earns an economic loss. If the price of each unit of output is $1.50, then, in the short run, it's clear that this firm:

A. should shut down.
B. is not maximizing its profit.
C. should produce more than 500 units a day.
D. should not shut down if its total variable cost is less than $750.


Answer: D

Economics

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