Question

A firm's marginal cost has a minimum value of $80, its average variable cost has a minimum value of $90, and its average total cost has a minimum value of $100. Then the firm will shut down in the short run once the price of its product falls below

a. $100.
b. $90.
c. $80.
d. $40.

Answer 1

b. $90.

Step-by-step explanation:

The shutdown rule elaborates that "in the short run a firm should continue to operate if price exceeds average variable costs"

Thus in this case, the firm will shut down in the short run once the price of its product falls below $90