A firm encounters its "shutdown point” when:

CA Foundation · Business Economics · MTP · September 2026
A firm encounters its "shutdown point” when:
(A) A. average total cost equals price at the profit-maximizing level of output
(B) B. average variable cost equals price at the profit-maximizing level of output
(C) C. average fixed cost equals price at the profit-maximizing level of output
(D) D. marginal cost equals price at the profit-maximizing level of output

Suggested Answer and Working Notes:

Correct Answer: Option (B)

B. average variable cost equals price at the profit-maximizing level of output

Topics: Price Determination in Different Markets

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