[amp_mcq option1=”Less than variable cost” option2=”Equal to variable cost” option3=”Equal to average cost” option4=”None of the above” correct=”option1″]<\/p>\n
The correct answer is: A. Less than variable cost.<\/p>\n
A shutdown point is the point at which a company’s revenue is less than its variable costs. At this point, the company is losing money on every unit it produces, and it would be better off shutting down production altogether.<\/p>\n
Option B is incorrect because a company would never choose to produce at a point where it is breaking even. If the price is equal to variable cost, the company is not making any profit, but it is also not losing any money. It would be better for the company to produce at a higher price, even if that price is less than average cost.<\/p>\n
Option C is incorrect because a company would never choose to produce at a point where it is losing money on every unit it produces. If the price is equal to average cost, the company is losing money on every unit it produces. It would be better for the company to produce at a lower price, even if that price is less than variable cost.<\/p>\n
Option D is incorrect because a shutdown point is a specific point on a company’s cost curve. It is not a general concept that applies to all companies.<\/p>\n","protected":false},"excerpt":{"rendered":"
[amp_mcq option1=”Less than variable cost” option2=”Equal to variable cost” option3=”Equal to average cost” option4=”None of the above” correct=”option1″]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[12],"tags":[],"class_list":["post-59272","post","type-post","status-publish","format-standard","hentry","category-economics","no-featured-image-padding"],"yoast_head":"\n