The figure given below shows the demand and cost curves of a perfectly competitive firm.Figure: 10.4
D: Demand curve
MC: Marginal cost curve
ATC: Average-total cost curve
AVC: Average-variable-cost curve
-According to Figure 10.4, the firm's shutdown price is:

Question

The figure given below shows the demand and cost curves of a perfectly competitive firm.Figure: 10.4
  D: Demand curve
MC: Marginal cost curve
ATC: Average-total cost curve
AVC: Average-variable-cost curve
-According to Figure 10.4, the firm's shutdown price is:

Quizplus · Accepted Answer

The shutdown price is the price at which the firm's revenue is not enough to cover its variable costs. In the given figure, we can see that the AVC curve intersects the demand curve at point A, which is slightly below $50. This means that at any price below $50, the firm would not be able to cover its variable costs and would suffer losses. Therefore, the firm's shutdown price is below $50, and the best choice is C.

The Figure Given Below Shows the Demand and Cost Curves