Question

exhibit 8-3 cost per unit curves
as shown in exhibit 8-3, the firm will produce in the short run if the price is at least equal to:
a. $1.50 per unit (point b).
b. $1.00 per unit (point a).
c. $4.00 per unit (point d).
d. $2.00 per unit (point c).

Explanation:

In the short run, a firm will produce if the price is at least equal to the minimum average variable cost (AVC), as this is the shutdown point. On the graph, point A represents the minimum of the AVC curve, with a price of $1.00 per unit. At or above this price, the firm can cover its variable costs and will operate in the short run.

Answer:

b. $1.00 per unit (point A)