If the price is less than the average variable cost at the quantity of output where MR = MC,in the short run a perfectly competitive firm will:

A) produce at a loss.
B) produce at a profit.
C) shut down production.
D) produce more than the profit-maximizing quantity.

Average Variable Cost

The total variable cost per unit of output, calculated by dividing total variable costs by the quantity of output.

MR = MC

Marginal Revenue equals Marginal Cost; a condition used to determine the profit-maximizing level of output for a firm.

Profit-maximizing Quantity

The level of output at which a business realizes the greatest profit, where marginal cost equals marginal revenue.