A firm has reached its shutdown point when price is equal to minimum average total cost.

Name: A firm has reached its shutdown point when price is equal to minimum average total cost.
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Question

Quizplus · Accepted Answer

A firm reaches its shutdown point when the price falls below the minimum average variable cost, not the minimum average total cost. At this point, the firm cannot cover its variable costs and it's better to cease production.

A Firm Has Reached Its Shutdown Point When Price Is