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Question 6 1 pts 1 Price MC ATC AVC P3 P6 pa P3 P2 P1 Q1 02 03 04 QS Shutdown point is at O p1 Op3 Op4 O p7
Question 7 1 pts Price MC ATC AVC P7 P6 P3 P2 PI Q1 02 03 04 Q3 Quantity Exit point is at Op4 O p1 Op3 O p7
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Answer #1

Answer to the question number 6:

Shutdown point is at p1.

Shutdown point occurs where AVC (average variable cost) is equal to MC (marginal cost). In the figure given in this particular question at price p1 the AVC=MC, therefore it is a shutdown point.

Answer to question 7:

The exit point is at point p4.

Because if the price is going below the average total cost (ATC) then the firm should exit in the long run. Here at price p4 the ATC is equal to MC so it is the exit point.

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