Which of the following would not be a barrier to entry into an industry?

Question

ScanSolve AI Tutor · Accepted Answer

The shutdown price for a firm in perfect competition occurs at the minimum point of its Average Variable Cost (SAVC) curve. If the market price falls below this level, the firm cannot cover its variable costs and will minimize losses by shutting down production.

Identify the SAVC curve on the graph.
This is the lowest of the three cost curves shown.
Locate the minimum point of the SAVC curve.
This is the point where the Short-run Marginal Cost (SMC) curve intersects the SAVC curve.
Read the corresponding price level on the y-axis (Cost, Revenue) for this minimum point.
The minimum point of the SAVC curve corresponds to the price level OB.

Therefore, the shutdown price of the firm is OB.

The final answer is $\text{C}$

Which of the following would not be a barrier to entry into an industry?

Answer

Step-by-step solution

Identify the SAVC curve on the graph.

Locate the minimum point of the SAVC curve.

Read the corresponding price level on the y-axis (Cost, Revenue) for this minimum point.

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