In the short run, a perfectly competitive firm will shut down if the market price falls below:

Correct answer: A) Minimum average variable cost

Explanation

In the short run fixed costs must be paid whether or not the firm produces. The firm continues as long as price covers average variable cost, since any excess contributes to fixed costs. Below minimum AVC it minimises losses by shutting down. Price below minimum ATC but above AVC means a loss, but production continues.