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 (18651925)
“Film is more than the twentieth-century art. Its another part of the twentieth-century mind. Its the world seen from inside. Weve come to a certain point in the history of film. If a thing can be filmed, the film is implied in the thing itself. This is where we are. The twentieth century is on film.... You have to ask yourself if theres anything about us more important than the fact that were constantly on film, constantly watching ourselves.”
—Don Delillo (b. 1926)