Table 8.8 refers to a perfectly competitive firm.

-Refer to Table 8.8 to answer this question.What is the value of the shutdown price?

Question

Table 8.8 refers to a perfectly competitive firm.
 
-Refer to Table 8.8 to answer this question.What is the value of the shutdown price?

Quizplus · Accepted Answer

The shutdown price is the minimum price at which a firm is able to cover its variable costs and avoid incurring losses. In Table 8.8, we can see that the variable cost per unit is $3.25. Therefore, the shutdown price for this firm is also $3.25. At any price below $3.25, the firm would prefer to shut down rather than produce and sell at a loss.

Table 8.8 Refers to a Perfectly Competitive Firm