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In the short run, a perfectly competitive firm will shut down if:

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Its price is greater than its marginal cost

Its price is less than its average variable cost

Its total revenue exceeds its total costs

Its fixed costs exceed its variable costs

answer is D.

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Detailed Solution

In the short run, when a firm cannot recover its fixed costs, the firm will choose to shut down temporarily if the price of the good is less than the average variable cost.

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