When do firms decide to shut down production in the short run? Explain it.

Economics (MindTap Course List)
13th Edition
ISBN:9781337617383
Author:Roger A. Arnold
Publisher:Roger A. Arnold
Chapter21: Production And Costs
Section21.4: Costs Of Production: Total, Average, Marginal
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  1. When do firms decide to shut down production in the short run? Explain it.
  2. How is the short run average cost curve and the long run average cost curve shaped? What is the difference between them?

Graphical representation of the short-run total cost curve showing total cost, fixed cost, variable cost:

and 

The marginal cost and average total cost:

 

 

600
500
400
-Total cost
300
-Fixed cost
-Variable cost
200
100
5
10
15
20
Transcribed Image Text:600 500 400 -Total cost 300 -Fixed cost -Variable cost 200 100 5 10 15 20
140
120
100
80
- Marginal cost
- Average total cost
60
40
20
10
15
20
Transcribed Image Text:140 120 100 80 - Marginal cost - Average total cost 60 40 20 10 15 20
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