Monopolist Shutdown Rule
A monopolist should shut down when price is less than average variable cost for every output level; in other words, where the demand curve is entirely below the average variable cost curve. Under these circumstances at the profit maximum level of output (MR = MC) average revenue would be lower than average variable costs and the monopolists would be better off shutting down in the short run. The shutdown rule can also be stated as the monopolist should shut down if average revenue is less than average variable costs at all levels of production.
Read more about this topic: Shutdown (economics)
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“This at least should be a rule through the letter-writing world: that no angry letter be posted till four-and-twenty hours will have elapsed since it was written.”
—Anthony Trollope (1815–1882)