Unformatted text preview: • The loss of shutdown is = F.C A. The firm should stay open if: 1. If it can cover all of its variable costs and some of the fixed costs 2. Should Stay open if the loss is less than F.C 3. P > AVC (See graph) B. Firm should Shutdown if: • The firm cannot cover all variable costs or any of fixed costs • (Loss if open) > (F.C) 1. (P) < (A.V.C) (See graph)...
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This note was uploaded on 04/15/2008 for the course ECON 100 taught by Professor Stephaniemartin during the Fall '07 term at Allegheny.
- Fall '07