A firm sells 1000 units per week.It charges $70 per unit,the average variable costs are $25,and the average costs are $65.At what price would the firm consider shutting down in the short run?
A)$10
B)$25
C)$65
D)$70

Question

​A firm sells 1000 units per week.It charges $70 per unit,the average variable costs are $25,and the average costs are $65.At what price would the firm consider shutting down in the short run?
A)​$10
B)$25
C)$65
D)​$70

Quizplus · Accepted Answer

In the short run, a firm will consider shutting down if the price falls below its average variable costs because it would not be able to cover its variable costs. Here, the average variable costs are $25, so the firm would consider shutting down if the price falls below $25.

​A Firm Sells 1000 Units Per Week

A Firm Sells 1000 Units Per Week