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Author Question: Define the shutdown point. Explain why the firm shuts down in the short run if the price falls below ... (Read 46 times)

HCHenry

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on: Jun 29, 2018
Define the shutdown point. Explain why the firm shuts down in the short run if the price falls below this point.
 
  What will be an ideal response?

Question 2

State colleges are an example of
 
  A) income maintenance programs.
  B) Social Security.
  C) welfare programs.
  D) subsidized services.


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JaynaD87

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Reply #1 on: Jun 29, 2018
Answer to Question 1

The shutdown point is the point at which the price equals minimum average variable cost. If the price falls further, the firm does not even cover its variable costs if it operates. Its loss if it operated thus exceeds the loss of shutting down and so the firm shuts down.

Answer to Question 2

D


HCHenry

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Reply 2 on: Jun 29, 2018
Great answer, keep it coming :)

lcapri7

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Reply 3 on: Yesterday
Gracias!

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