Joe's Garage operates in a perfectly competitive market.At the point where marginal cost equals marginal revenue,ATC = $20,AVC = $15,and the price per unit is $10.In this situation,

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In a perfectly competitive market, firms will shut down in the short run if the price is below the minimum average variable cost (AVC). This is because they are unable to cover their variable costs, let alone their fixed costs. In this case, Joe's Garage has an AVC of $15 and the price is $10, which is below the minimum AVC. Therefore, Joe's Garage will shut down immediately.

Joe's Garage Operates in a Perfectly Competitive Market