WAEC Economics 2018 Objective — Question 21

Question 21 of 50 from the West African Examinations Council (WAEC) Economics 2018 Objective paper, with the correct answer and a full explanation.

In the long-run, a firm must shut down if its average revenue is

A. greater than average cost
B. less than average variable costCorrect
C. equal to the minimum average cost
D. equal to the average cost

Explanation

A firm should shut down in the short run (and exit in the long run) if its average revenue falls below average variable cost, as it cannot even cover its variable costs.

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