Calculating The Shutdown Point
The short run shutdown point is the minimum of the average variable cost curve. Assume that firms total cost function is TC = Q3 -5Q2 +60Q +125. Variable cost = Q3 -5Q2 +60Q Average variable costs = (Q3 -5Q2 +60Q)/Q= Q2 -5Q + 60
- AVC' = 2Q - 5
- AVC' = 0
- 2Q - 5 = 0
- 2Q = 5
- Q = 2.5
Read more about this topic: Shutdown (economics)
Famous quotes containing the words calculating the, calculating and/or point:
“What our children have to fear is not the cars on the highways of tomorrow but our own pleasure in calculating the most elegant parameters of their deaths.”
—J.G. (James Graham)
“What our children have to fear is not the cars on the highways of tomorrow but our own pleasure in calculating the most elegant parameters of their deaths.”
—J.G. (James Graham)
“...there is a difference between being convinced and being stubborn. I’m not certain what the difference is, but I do know that if you butt your head against a stone wall long enough, at some point you realize the wall is stone and that your head is flesh and blood.”
—Maya Angelou (b. 1928)