Answer to Question #59385 in Microeconomics for georgi
Shutdown point is determined by the AVC, so the firm will shut down, if P < AVC. If the market price fall to $0.7 per poster, then AVC = 1500/1000 = $1.5 per poster for the first thousand posters, AVC = 1200/1000 = $1.2 per poster for the second thousand posters and AVC = 800/1000 = $0.8 per poster for the each additional thousand posters, so at any level of production P < AVC and the firm should shut down.
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