Why is the minimum of the average variable cost curve called the shutdown point?
What will be an ideal response?
The lowest point on the average variable cost curve is called the shutdown point because when price falls below this point, total revenue is insufficient to cover variable costs and the firm will shut down and incur a loss equal to its fixed costs.
Economics
You might also like to view...
A sudden rise in the market demand in a competitive industry leads to
a. A short run market equilibrium price lower than the original equilibrium b. A market equilibrium lower than the short run price c. Some firms exiting the market d. All of the above
Economics
The word best associated with price elasticity of demand is
A. relative. B. positive. C. unit. D. total.
Economics