Assume two firms have the same total costs of production. Firm A's average variable cost if $5 per unit and firm B's average variable cost is $7 . Both firms have an average total cost of $8

If the current market price is $6 and remains unchanged what action will both firms take in the short run and the long run?

Firm B will shut down in the short run because it is suffering operating losses. If the product price doesn't reach $8 or better it will exit the industry. Firm A will continue to produce in the short run because it is making an operating profit. However, if market price does not rise to $8 or better it too will exit in the long run.