Consider the figure. At the price of $6, the firm's short-run decisionshould be toA. exit the market.B. decrease production.C. continue producing because it is making a positive profit.O D. stop producing because variable costs cannot be covered.Dollars per Unit$6OutputMCATCAVCQ

The shutdown point represents the lowest price at which a company can sustain its presence in the…

Consider the figure. At the price of $6, the firm's short-run decision should be to O A. exit the market. OB. decrease production. OC. continue producing because it is making a positive profit. O D. stop producing because variable costs cannot be covered. Dollars per Unit $6 Output MC ATC AVC Q 5

Consider the figure. At the price of $6, the firm's short-run decision should be to O A. exit the market. OB. decrease production. OC. continue producing because it is making a positive profit. O D. stop producing because variable costs cannot be covered. Dollars per Unit $6 Output MC ATC AVC Q 5

Principles of Economics (MindTap Course List)

8th Edition

ISBN:9781305585126

Author:N. Gregory Mankiw

Publisher:N. Gregory Mankiw

Chapter14: Firms In Competitive Markets

Section: Chapter Questions

Problem 4PA

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Question

Consider the figure. At the price of $6, the firm's short-run decision
should be to
A. exit the market.
B. decrease production.
C. continue producing because it is making a positive profit.
O D. stop producing because variable costs cannot be covered.
Dollars per Unit
$6
Output
MC
ATC
AVC
Q

Expert Solution

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Step 1: Concept of Shut-Down Point

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Step 2: What if Price is at the Shutdown point of lower than the shutdown point

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