Use the table below to answer the following questions.
Table 12.2.5

-Refer to Table 12.2.5. Archibald's Tattoos is a perfectly competitive firm. The firm's total costs are shown in the table. The price at Archibald's shut-down point is

Question

Use the table below to answer the following questions.
Table 12.2.5
 
-Refer to Table 12.2.5. Archibald's Tattoos is a perfectly competitive firm. The firm's total costs are shown in the table. The price at Archibald's shut-down point is

Quizplus · Accepted Answer

In a perfectly competitive market, a firm will shut down if the price falls below the minimum of its average variable cost (AVC) curve. In this table, we can see that the AVC becomes greater than the price at a quantity of 8, where the total variable cost is $100. Therefore, the shut-down point is at a price of $12.50 ($100/8). Any price less than $12.50 would cause Archibald's Tattoos to incur losses greater than its fixed cost, and shutting down would minimize its losses.

Use the Table Below to Answer the Following Questions