Question

The shutdown point in the long run is ___________________. Minimum Marginal Cost Minimum Average Fixed Cost...

  1. The shutdown point in the long run is ___________________.

    1. Minimum Marginal Cost

    2. Minimum Average Fixed Cost

    3. Minimum Average Variable Cost

    4. Minimum Average Total Cost



  1. The shutdown point in the short run is ___________________.

    1. Minimum Marginal Cost

    2. Minimum Average Fixed Cost

    3. Minimum Average Variable Cost

    4. Minimum Average Total Cost

Business   Economics   
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Homework Answers

Answer #1

1.

Minimum Average Total Cost

Explanation :

In long run, firm will exit the industry when price is below average total cost curve because in long run all cost are variable.

2.

Minimum Average Variable Cost

Explanation :. In short run, firm will shutdown when price is below average variable cost. Because when price is below average variable cost, firm loss will be equal to fixed cost and some portion of variable cost.so when it will shutdown its cost will be equal to fixed cost only. So firm will shutdown when price is below average variable cost.

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