Figure 9-1
Figure 9-1 shows the marginal and average total cost curves for a firm producing product A. What would be the minimum price this firm could charge and still continue to supply A to the market in the long run?
A) $4
B) $5
C) $6
D) $8

Question

Figure 9-1 
Figure 9-1 shows the marginal and average total cost curves for a firm producing product A. What would be the minimum price this firm could charge and still continue to supply A to the market in the long run?
A) $4 
B) $5 
C) $6 
D) $8

Quizplus · Accepted Answer

The minimum price that the firm could charge and still continue to supply A to the market in the long run is equal to the minimum point of the average total cost curve, which is at a price of $5. Charging a price lower than $5 would mean that the firm is not covering its average total cost, and it would eventually go out of business in the long run.

Figure 9-1 Figure 9-1 Shows the Marginal and Average Total Cost Curves