Operate or Shut Down? In Figure 24.4 on page 547, suppose the market price of shirts drops to $2. At this price, the marginal principle will be satisfied at a point below point on the marginal-cost...

Operate or Shut Down? In Figure 24.4 on page 547, suppose the market price of shirts drops to $2. At this price, the marginal principle will be satisfied at a point below point

on the marginal-cost curve. Price is

(less/greater) than AVC, so the firm will be better off

(operating/ shutting down).