Any price ______ will cause the firm to shut down production.
A) below the minimum of MC
B) above the maximum of AC
C) below the minimum of AC
D) between MC and AC

Question

Quizplus · Accepted Answer

The minimum of AC is the point where the average cost curve is the lowest. This point represents the minimum efficient scale of production. If the price falls below this level, the firm will start making losses as it won't be able to cover its average total cost. Thus, the best choice is (C) below the minimum of AC.

Any Price ______ Will Cause the Firm to Shut Down