In perfect competition the shutdown point is defined by
A)where price = avc
B)where price = ac
C)where price = mc
D)when the firm starts to incur loss

Question

Quizplus · Accepted Answer

The shutdown point in perfect competition is defined by where price equals average variable cost (AVC). At this point, the firm covers its variable costs but cannot cover any of its fixed costs, making it indifferent between producing and shutting down.

In Perfect Competition the Shutdown Point Is Defined by