Question

A perfect competitor found that it could produce a maximum output of 100 units each day, which it
can sell at the market price or AR of R100, but even at this rate, it would make a loss. Considering
this information, under what circumstances would it definitely make a smaller loss if it shut down
and produced nothing

Answer 1

A perfect competitor found that it could produce a maximum output of 100 units each day, which it can sell at the market price or AR = P = MC = MR = R100, but even at this rate, it would make a loss. Considering
this information, it would definitely make a smaller loss if it shut down and produced nothing if his P < AVC or AVC > 100 and his losses are minimized at this amount of output produced.