Exhibit 8.13

-Refer to Exhibit 8.13,which shows a perfectly competitive market.Firms could not cover average variable cost at _____

Question

Exhibit 8.13
 
-Refer to Exhibit 8.13,which shows a perfectly competitive market.Firms could not cover average variable cost at _____

Quizplus · Accepted Answer

At point m, the price is only equal to the minimum point on the average variable cost curve (AVC), and firms are only able to cover their variable costs. They are not able to cover their fixed costs, and therefore cannot make profits in the short run. This is the shutdown point for firms in a perfectly competitive market.

Exhibit 8.13 -Refer to Exhibit 8.13,which Shows a Perfectly Competitive Market.Firms Could