WAEC Economics 2016 Objective — Question 21
Question 21 of 50 from the West African Examinations Council (WAEC) Economics 2016 Objective paper, with the correct answer and a full explanation.
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21. At which stage of production should a firm shut down? When (a) AVC = ATC (b) AVC < Price (c) AVC > Price (d) AVC = MC
- A. AVC = ATC
- B. AVC < Price
- C. AVC > PriceCorrect
- D. AVC = MC
Explanation
A firm will shut down when it is unable to cover its variable cost i.e. value AVC < Price. Thus a firm shuts down when AVC > Price.
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