IDNLearn.com offers a user-friendly platform for finding and sharing answers. Get prompt and accurate answers to your questions from our community of experts who are always ready to help.
Answer: close down because, by producing, your losses will exceed your total fixed costs
Explanation:
When the price of a particular product is less than minimum AVC, the best thing to do in such scenario is close down because, because if one produces, the losses will be more than the total fixed costs for that product.
When such scenario happens, the company won't be able to cover its operational cost and therefore won't make profit but rather losses and therefore, the company should close down.