Exhibit 7-16 Short-run cost curves for a competitive firm
In Exhibit 7-16, the firm should shut down in the short run if the market price of its product falls below:

Question

Exhibit 7-16  Short-run cost curves for a competitive firm ​
 In Exhibit 7-16, the firm should shut down in the short run if the market price of its product falls below:

Quizplus · Accepted Answer

In the short run, a competitive firm should shut down if the price is less than its minimum average variable cost. In Exhibit 7-16, the minimum AVC is $30 per unit, which means the firm should shut down if the market price of its product falls below $30 per unit. Therefore, the correct choice is B, which is $30 per unit.

Exhibit 7-16 Short-Run Cost Curves for a Competitive Firm ​

Exhibit 7-16 Short-Run Cost Curves for a Competitive Firm