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 long 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 long run?
A)​$25
B)$0
C)$15
D)​$10

Quizplus · Accepted Answer

The firm will shut down in the long run if the price is below the average variable cost. In this case, the average variable cost is $10, so the firm will shut down if the price is below $10.

A Firm Sells 1000 Units Per Week