The figure given below shows revenue and cost curves of a monopolistically competitive firm.Figure: 12.1
In the figure,
MR: Marginal revenue curve
ATC: Average total cost curve
AVC: Average variable cost curve
MC: Marginal cost curve
-According to Figure 12.1, the firm:
A)will shut down temporarily at any price below A.
B)will operate at a price below A, as long as it is greater than marginal cost.
C)will shut down at a price below A only in the long run.
D)will break-even at the price level C.
E)will shut down if the price falls below E.

Question

The figure given below shows revenue and cost curves of a monopolistically competitive firm.Figure: 12.1
  In the figure,
MR: Marginal revenue curve
ATC: Average total cost curve
AVC: Average variable cost curve
MC: Marginal cost curve
-According to Figure 12.1, the firm:
A)will shut down temporarily at any price below A. 
B)will operate at a price below A, as long as it is greater than marginal cost. 
C)will shut down at a price below A only in the long run. 
D)will break-even at the price level C. 
E)will shut down if the price falls below E.

Quizplus · Accepted Answer

A firm will shut down temporarily if the price falls below the minimum average variable cost, which is represented by point A in the figure.

The Figure Given Below Shows Revenue and Cost Curves of a Monopolistically