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If a firm is just covering all of its variable costs, it is operating    Group...

If a firm is just covering all of its variable costs, it is operating   

Group of answer choices

at its shutdown point

at its breakeven point

at the beginning of stage I of production

at the minimum point of its average total cost curve

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Homework Answers

Answer #2

A firm shut's down when it is not able to cover its variable cost from total revenue.

So a firm can bear losses if there is a loss due to fixed cost but the firm cannot bear the loss if it is because of variable cost.

Hence if the firm is just covering its variable cost then it is operating at its shut-down.

After that, if revenue is less than the variable cost then the firm will stop producing.

Shut down point -

Total Revenue = Variable cost

Or

Price = Average variable cost

answered by: anonymous
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