Which of the following statements is correct in reference to the figure below?
A)B is the shutdown point.
B)B is the profit-maximizing point.
C)C is the zero-profit point.
D)A is the shutdown point.
E)C is the shutdown point.

Question

Which of the following statements is correct in reference to the figure below? 
A)B is the shutdown point. 
B)B is the profit-maximizing point. 
C)C is the zero-profit point. 
D)A is the shutdown point. 
E)C is the shutdown point.

Quizplus · Accepted Answer

The shutdown point is the point where price is below the minimum of the average variable cost curve. In this figure, the minimum of the AVC curve is at point A. Therefore, A is the shutdown point.

Which of the Following Statements Is Correct in Reference to the Figure