-The figure above shows a firm in a perfectly competitive market. The firm will shut down if price falls below

Name: -The figure above shows a firm in a perfectly competitive market. The firm will shut down if price falls below
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Question

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In a perfectly competitive market, a firm will shut down if the price falls below the average variable cost (AVC). P₂ represents the minimum point of the AVC curve, so if the price falls below P₂, the firm will not be able to cover its variable costs and will shut down.

-The Figure Above Shows a Firm in a Perfectly Competitive