8.6 : 종료 지점

In the short run, even if a firm is producing at the profit-maximizing level, it might face losses if its average total cost is more than the average revenue. This could be due to increased production expenses or fluctuating selling prices.

Under these circumstances, it is important to decide whether the firm should continue operating or shut down.

It depends on the Average Variable Cost, which is a U-shaped curve.

When the price is sufficient to cover the average variable cost, it's beneficial to continue operations.

Even if the price doesn't cover the average total cost, it aids in paying for variable costs and contributes to covering fixed costs. If the firm stops production, it would still incur the full amount of its fixed costs, leading to higher overall losses.

If the price falls below the average variable cost, it is sensible for a firm to stop production. Continuing would only deepen the losses.

This principle, known as the 'shutdown rule,' is crucial for a firm's short-run survival. It guides whether a firm should continue operations or temporarily stop them, ensuring the most effective use of resources in the short run.