A Competitive Firm's Shutdown Price Is Equal to the Minimum

question 69

Multiple Choice

A competitive firm's shutdown price is equal to the minimum value of the firm's

• A) marginal cost.
• B) average cost.
• C) average variable cost.
• D) fixed and sunk costs.

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Definitions:

Marginal Cost

The cost of producing one additional unit of a product, calculated by the change in total cost divided by the change in quantity.

Total Fixed Cost

The sum of all costs that remain constant regardless of the level of production or output within a business.

Vertical Distance AB

A measure of the difference in height between two points, A and B, often used in mathematics and physics to determine the direct vertical separation.

Average Total Cost Curve

A graphical representation illustrating the cost per unit of output, calculated by dividing the total cost by the quantity of output produced.