Question

3:52 PM Thu Mar 26 Course Home X G total cost is the cost of w x Do Homework - Mason mathxl.com ECON 101_002 Basic Economics - SPRING 2020 Homework: Chapter 11 Homework Score: 0 of 1 pt Checkpoint 1 Test A 7 10 of 50 (8 complete) The table shows the cost structure of a firm selling bottles of water in a perfectly competitive market. What is the quantity at the firm's shutdown point? bottles of water per week and the market price The firm's shutdown point occurs at a quantity of a bottle Enter your answer in the edit fields and then chick Check Answer All parts showing

Answer 1

Firms shut down at a point where their Price<Minimum Average Variable Costs.

Now in a perfectly Competitive Market, Price Charged is always equal to Marginal Cost(MC). So, MC column above depicts the Price Charged at different quantities of the water bottles.

Now, MC Equals AVC when AVC is Minimum.

Thus, Minimum AVC = $3.50

Now if Price below 3.50, firm will shut down. Thus, firm's shut down point occurs at a quantity of 300 bottles of water per week and the market price is $3.50 a bottle.