A firm encounters its 'shutdown point' when
A
Average total cost equals price at the profit-maximizing level of output
B
Average variable cost equals price at the profit-maximizing level of output
C
Average fixed cost equals price at the profit-maximizing level of output
D
Marginal cost equals price at the profit-maximizing level of output
Correct Answer: Average variable cost equals price at the profit-maximizing level of output
A firm encounters its 'shutdown point' when average variable cost equals price at the profit-maximizing level of output.