Will a profit- maximising firm in a competitive merket produce a positive level of output in the short run it the market price is less than the minimum of AVC? Give an explanation.

Will a profit- maximising firm in a competitive merket produce a posit

1.	Will a profit- maximising firm in a competitive merket produce a positive level of output in the short run it the market price is less than the minimum of AVC? Give an explanation.
Answer» Solution :No, a profit-maximising firm will not produce a LEVEL of OUTPUT in the SHORT RUN when market price is less than the minimum of AVC. It happens because equality between market price and minimum AVC indicates shut down point and a firm will NEVER operate at a price less than the minimum AVC.