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August 31, 2014

Homework Help: Microconomics [URGENT]

Posted by Anonymous on Thursday, October 30, 2008 at 9:21pm.

In the short run, do perfectly competitive firms have a loss of profit or a break even when MC = AVC? Do these firms choose whether to produce or shutdown or both? Do they choose to produce nothing or a specific quantity or both?

If MC = ATC in the short run for perfectly competitive firms, are they making a break even or profit?

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I understand that in the short run, perfectly competitive firms are only interested in the variable costs rather than the total costs. But, I don't know if they are making zero profit or a loss, what they decide to produce,and whether they will keep producing or start shutting down? I think in the short run firms keep producing above the AVC, so for ATC, they are making a profit, correct?

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