Final answer:
The average variable cost curve and the marginal cost curve intersect at the shutdown point on a cost curve diagram. This point indicates where the firm's revenue is insufficient to cover variable costs, necessitating a shutdown if prices fall below this point.
Step-by-step explanation:
The two lines on a cost curve diagram that intersect at the shutdown point are the average variable cost curve and the marginal cost curve. The shutdown point represents the price level below which the firm would not generate enough revenue to cover its variable costs, leading to a situation where continuing operations would increase losses. Firms typically enter a market when they anticipate potential profits due to high prices or low competition, and they exit a market when they cannot cover their opportunity costs, often due to persistent losses or more favorable opportunities elsewhere. Entry and exit typically do not occur in the short run due to fixed contracts and sunk costs but are common in the long run as firms adjust to changing market conditions.