Refer to the accompanying figure to answer the following questions.

-A firm would shut down in the short run if the price is

Question

Refer to the accompanying figure to answer the following questions.
 
-A firm would shut down in the short run if the price is

Quizplus · Accepted Answer

In the short run, the firm will shut down if the price falls below the minimum point of the AVC curve (where AVC is at its minimum). In this figure, the minimum point of the AVC curve is at a price of $4. Therefore, if the price falls below $4, the firm will shut down. Hence, the best choice is option D.

Refer to the Accompanying Figure to Answer the Following Questions