Suppose a Risk-Neutral Competitive Firm Must Produce Output Before the Market

Multiple Choice

Suppose a risk-neutral competitive firm must produce output before the market price is known.If the uncertain price is given by p = p* + e,where e is a random term with an expected value of zero,a competitive firm should shut down in the short run if:

A) p* < AVC.
B) p* + e < AFC.
C) p* < AFC.
D) p* < MC.