The following graph shows the total variable costs and the total costs for a competitive producer:

-Refer to the above graph to answer this question.What is the value of the shut-down- price?

Question

The following graph shows the total variable costs and the total costs for a competitive producer:
 
-Refer to the above graph to answer this question.What is the value of the shut-down- price?

Quizplus · Accepted Answer

The shut-down price is the price at which the total revenue is equal to the total variable cost. In the given graph, the total variable cost curve intersects the demand curve at $12. Therefore, the shut-down price is $12. The producer should shut down production at any price below $12 and continue producing as long as the price is above $12. So, the best choice is B.

The Following Graph Shows the Total Variable Costs and the Total