In perfect competition, when price is less than minimum LRAC firm produces ______.

zero output

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output where LRMC and LRAC intersect

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both A and B

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none of the above

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Solution

The correct option is B zero output
Following the shutdown condition, P $<$ LRAC, when price is less than LRAC, the firm will choose to exit the industry as they are making losses.

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In perfect competition, when price is less than minimum LRAC firm produces ______.

The correct option is B zero outputFollowing the shutdown condition, P < LRAC, when price is less than LRAC, the firm will choose to exit the industry as they are making losses.

The correct option is B zero output
Following the shutdown condition, P $<$ LRAC, when price is less than LRAC, the firm will choose to exit the industry as they are making losses.