Refer to the accompanying figure to answer the following questions.

-This firm would shut down in the long run if the price

Question

Refer to the accompanying figure to answer the following questions.
 
-This firm would shut down in the long run if the price

Quizplus · Accepted Answer

In the long run, a firm will shut down if it cannot cover its variable costs. In this graph, the minimum point of the AVC curve is at $5, which represents the minimum amount needed to cover variable costs. Therefore, if the price falls below $5, the firm would not be able to cover its variable costs and would shut down in the long run. Therefore, the correct choice is E.

Refer to the Accompanying Figure to Answer the Following Questions