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Unformatted text preview: P 1 then the firm still covers all its variable costs plus part of the fixed costs. If the price further falls to P2 the firm cannot cover even its variable costs. It is then advisable that the firm should close down. Therefore Shutdown point for a firm is one where price is just equal to its Average Variable Cost or below AVC....
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This note was uploaded on 11/26/2011 for the course ECON MICRO ec 201 taught by Professor - during the Fall '10 term at Montgomery.
- Fall '10