alevel economics 基础 讲义（完整版）.pptVIP

The shutdown rule If price drops below the AVC curve, the revenue from each unit produced does not even cover the variable cost/s of production. The firm should shut down. Illustration: (A) (B) (C) (D) Sales $60 0 60 60 VC (40) 0 (70) (60) Gross profit 20 0 (10) 0 FC (30) (30) (30) (30) Loss (10) (30) (40) (30) The shutdown rule (cont.) (MR) Need to change Revenue, Costs and Profit Some qualifications long-run profit maximisation the meaning of ‘profit’ loss minimising: still produce where MR = MC short-run shut-down point: P = AVC long-run shut-down point: P =