Figure 9-13

-Refer to Figure 9-13.When price falls from P₃ to P₁,the firm finds that
A)fixed cost is higher at a production level of Q₁ than it is at Q₃.
B)it should produce Q₁ units of output.
C)it should produce Q₃ units of output.
D)it should shut down immediately.

Question

Figure 9-13
 
-Refer to Figure 9-13.When price falls from P₃ to P₁,the firm finds that
A)fixed cost is higher at a production level of Q₁ than it is at Q₃. 
B)it should produce Q₁ units of output. 
C)it should produce Q₃ units of output. 
D)it should shut down immediately.

Quizplus · Accepted Answer

When the price falls to P₁, it is below the firm's average variable cost, indicating that the firm cannot cover its variable costs and should shut down immediately to minimize losses.

Figure 9-13 -Refer to Figure 9-13.When Price Falls from P₃ to P₁,the