Figure 10.6

Figure 10.6 shows cost and demand curves facing a profit-maximizing, perfectly competitive firm.
-Refer to Figure 10.6.Identify the short-run shut down point for the firm.

Question

Figure 10.6
  
Figure 10.6 shows cost and demand curves facing a profit-maximizing, perfectly competitive firm.
-Refer to Figure 10.6.Identify the short-run shut down point for the firm.

Quizplus · Accepted Answer

The short-run shutdown point for a firm occurs where the price is equal to the minimum average variable cost (AVC). At point b, the firm is covering its variable costs but not its fixed costs, indicating the shutdown point.

Figure 10.6 Figure 10.6 Shows Cost and Demand Curves Facing a Profit-Maximizing