b) Shut-down points

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Last updated 10:55 PM on 5/11/26
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4 Terms

1
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  • state why some firms continue producing while making a loss

  • in the hope that they will soon make a profit

2
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  • state when it is reasonable for a firm to shut down in the short-run

  • show the short-run shut-down point on a graph

  • if the selling price ≤ AVC

    • the firm cannot cover the AFC → the firm is making a loss

<ul><li><p>if the selling price <span>≤</span> AVC</p><ul><li><p>the firm cannot cover the AFC → the firm is making a loss</p></li></ul></li></ul><p></p>
3
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  • state when it is reasonable for a firm to shut down in the long-run

  • show the long-run shut-down point on a graph

  • if the selling price ≤ ATC

    • the firm cannot cover the ATC → the firm is making a loss

<ul><li><p>if the selling price ≤ ATC</p><ul><li><p>the firm cannot cover the ATC → the firm is making a loss</p></li></ul></li></ul><p></p>
4
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  • n/a

  • n/a