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)
“Sin in this country has been always said to be rather calculating than impulsive.”
—Frank Moore Colby (1865–1925)
“Only the flow matters; live and let live, love and let love. There is no point to love.”
—D.H. (David Herbert)