Use the following to answer questions $$\begin{array}{l}
\text { Total Cost for a Perfectly Competitive Firm }\\
\begin{array} { c c }
\begin{array} { cc }
\text { Quantity } \
\text { per } &
\end{array} & \text { Total } \
\text { period }&\text { Cost } \
0 & \$ 10 \
1 & \$ 16 \
2 & \$ 20 \
3 & \$ 22 \
4 & \$ 24 \
5 & \$ 25 \
6 & \$ 27 \
7 & \$ 30 \
8 & \$ 34 \
9 & \$ 39 \
10 & \$ 45
\end{array}
\end{array}$$
-(Exhibit: Total Cost for a Perfectly Competitive Firm)The firm will stop production and shut down if the price is:

Question

Use the following to answer questions $$\begin{array}{l}
\text { Total Cost for a Perfectly Competitive Firm }\\
\begin{array} { c c } 
\begin{array} { cc } 
\text { Quantity } \
\text { per } &
\end{array} & \text { Total }    \
\text { period }&\text { Cost } \
0 & \$ 10 \
1 & \$ 16 \
2 & \$ 20 \
3 & \$ 22 \
4 & \$ 24 \
5 & \$ 25 \
6 & \$ 27 \
7 & \$ 30 \
8 & \$ 34 \
9 & \$ 39 \
10 & \$ 45
\end{array}
\end{array}$$
-(Exhibit: Total Cost for a Perfectly Competitive Firm)The firm will stop production and shut down if the price is:

Quizplus · Accepted Answer

The firm will shut down if the price is below the average variable cost. At quantity 5, the total cost is $25, and the fixed cost is $10, so the variable cost is $15. The average variable cost is $15/5 = $3. Since $2.50 is below this, the firm will shut down.

Use the Following to Answer Questions -(Exhibit: Total Cost for a Perfectly Competitive Firm)The Firm Will