If price is equal to short-run average variable cost,the firm is at the point known as:
A)the break even point.
B)the profit maximizing point.
C)the shutdown point.
D)the revenue maximizing point.

Question

Quizplus · Accepted Answer

When price is equal to short-run average variable cost, the firm is at the shutdown point. At this point, the firm is not making any profit and is only covering its variable costs. If the price falls below the minimum level of short-run average variable cost, the firm would be better off shutting down temporarily and using its resources elsewhere until prices rise again.

If Price Is Equal to Short-Run Average Variable Cost,the Firm