A firm will shut down in the long run if its earning is
A firm will shut down in the long run if its earning is
Less than normal profit
Greater than normal profit
Equal to super normal profit
Less than super normal profit
Correct answer is A
The long run is a phase where all factors of production are variable and firms are able to adjust all costs. If its earnings are less than the normal profits, it will shut down. A firm should earn enough to cover its total cost per unit in order to remain in business.
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