A firm will shut down in the long run if its earning is

  • A less than normal profit
  • B greater than normal profit
  • C equal to super normal profit
  • D less than super normal profit
waec 2011economics

The correct answer is A. less than normal profit

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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