The output where MC = AVC is called the

Question

Quizplus · Accepted Answer

The shutdown point is where the Marginal Cost (MC) curve intersects with the Average Variable Cost (AVC) curve. At this point, the firm is just covering its variable cost and is not making any profit. If the price falls below this point, the firm will not be able to cover its variable costs and will have to shut down in the short run. Therefore, A is the best choice as the output where MC=AVC is the shutdown point. B is not correct because the break-even point is where the Total Revenue (TR) curve intersects with the Total Cost (TC) curve, not where MC=AVC. C is not correct because Profit maximizing point is where MR=MC, not where MC=AVC. D is not correct because Revenue maximizing point is where MR=0, not where MC=AVC.

The Output Where MC = AVC Is Called the