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From course:

Economics A Level (DONEEEEEEE)

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Question:

What are Shutdown Points? -In the Long Run, what happens if the Firm is below its Shutdown Points?

Author: eric_galvao



Answer:

-Shutdown Points are the Points where MC = ATC {A} or AVC {B}(FC is included in ATC) -If its below Shutdown Point A, The Firm should Leave the Market. The Losses the Firm has is Not Sustainable (Note, in the Short Run, it should Keep Production -If its below Shutdown Point B, the Firm should Stop Production as the Variable Costs are not being Covered


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