CA CPT Model Test Paper 1 with solutions for online practice

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Question : 117 of 201

Marks: +1, -0

When price is less than average variable cost at the profit maximizing level of output, a firm should:

Shut down, since it cannot recover its variable cost
Produce where MC = MR, if operating in short run
Produce where MC = MR, if operating in long run
None of the above

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