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
The correct answer is: A
Explanation
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.