The short-run shut-down price is the:

Question

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The short-run shut-down price is the minimum of the AVC curve, because if the price falls below this point, the firm cannot cover its variable costs and will shut down in the short run. It is not the price at which economic profit is zero (choice A), because a firm can still make zero economic profit while operating in the short run. It is also not the intersection of the MC and ATC curves (choice C) or the minimum of the AFC curve (choice D), as these do not necessarily indicate where shut-down occurs.

The Short-Run Shut-Down Price Is The