A firm sells 1000 units per week.It charges $15 per unit,the average variable costs are $10,and the average costs are $25.At what price does the firm consider shutting-down in the short run?
A)$25
B)$0
C)$15
D)$10

Question

A firm sells 1000 units per week.It charges $15 per unit,the average variable costs are $10,and the average costs are $25.At what price does the firm consider shutting-down in the short run?
A)​$25
B)$0
C)$15
D)​$10

Quizplus · Accepted Answer

In the short run, a firm considers shutting down if the price falls below its average variable costs. Here, the average variable costs are $10, so the firm would consider shutting down if the price drops to $10 or below.

A Firm Sells 1000 Units Per Week