Assertion (A): A firm shuts down in the short run if price falls below minimum AC.
Reason (R): Minimum AVC is the short-run shut-down point.

Both A and R are true, and R is the correct explanation of A.Correct answerYour answerBoth A and R are true, but R is not the correct explanation of A.Correct answerYour answerA is true, but R is false.Correct answerYour answerA is false, but R is true.Correct answerYour answer

Show the answer and explanation

CorrectNot quiteAnswer D

Correct answer: D

A is false: in the short run the test is AVC, not AC.
R is true.

Concept: Shut-down is at AVC
Typical timeTypical: 70 s
Your timeYours: —

The rule this testsProfit maximisation and the firm's supply

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Assertion (A): A firm shuts down in the short run if price falls below minimum AC.Reason (R): Minimum AVC is the short-run shut-down point.

Explanation

Assertion (A): A firm shuts down in the short run if price falls below minimum AC.
Reason (R): Minimum AVC is the short-run shut-down point.