Figure 13-1
Suppose that a firm in a competitive market has the following cost curves:
-Refer to Figure 13-1.The firm should shut down if the market price is

Question

Figure 13-1
Suppose that a firm in a competitive market has the following cost curves: 
-Refer to Figure 13-1.The firm should shut down if the market price is

Quizplus · Accepted Answer

The firm should shut down if the market price is less than the minimum of the average variable cost curve (AVC) which is $4.50 in this case. Therefore, the firm should shut down if the market price is less than $4.50. Thus, the correct choice is D.

Figure 13-1 Suppose That a Firm in a Competitive Market Has the Has