--%>

Explain Shut Down Price

Explain the term Shut Down Price? Illustrate it.

E

Expert

Verified

Shut Down Price (PSD): In purely competitive firm it is the price at which it loses exactly similar amount of money as if it shut down totally (that is, losing the value of fixed cost). Any price lesser than this is a price at which the firm is fine off shutting down than operating (that is, it will lose less shutting down than generating where marginal revenue equivalents marginal cost). Any price bigger than this and the firm is fine off operating than shutting down in short run, even when it is making a loss.  The shut down price is at minimum point on the average variable cost (AVC) curve, or PSD = minimum AVC.

   Related Questions in Macroeconomics

  • Q : Meaning of Fiscal policy Meaning of

    Meaning of Fiscal policy:Fiscal policy is the set of decisions and principles of a government regarding the extent of public expenses and mode of financing them. It is about the attempt of g

  • Q : Define bank rate policy Define bank

    Define bank rate policy? How does it operate as a technique of credit control? Answer: Bank rate is the rate at which the central bank provides loans to the commerc

  • Q : Tax when consumer pay high price When a

    When a tax on goat cheese is completely paid by consumers via higher prices, then the tax has been: (i) alleviated. (ii) Forward shifted. (iii) Backward shifted. (iv) Actualized. (v) Randomized. Can someone help me in getting throu

  • Q : Business fixed investment-Inventory

    Describe the following terms: (i) Business fixed investment (ii) Inventory Investment (iii) Residential construction Investment (iv) Public Investment.

  • Q : Why is tax not a capital receipt

    Illustrate, why is tax not a capital receipt?

  • Q : Why tax considered as revenue receipt

    Why is tax considered as revenue receipt? Answer: Since tax neither makes a liability for government nor decreases assets of the government.

  • Q : EQUILIBRIUM GDP WHAT IS THE CHANGE IN

    WHAT IS THE CHANGE IN EQUILIBRIUM gdp CAUSED BY THE ADDITION OF NET EXPORTS?

  • Q : Founder of utilitarianism The founder

    The founder of utilitarianism be: (1) Adam Smith. (2) John Stuart Mill. (3) Jeremy Bentham. (4) Feodor Dostoyevsky. (5) Thorstein Veblen. (6) Alfred Marshall. Can someone help me in getting through this problem.

  • Q : Difference on consumer willing to pay

    I have a problem in economics on Consumer Surplus-Difference consumer willing to pay and what actually pay. Please help me in the following question. The consumer surplus signifies to the difference among the: (i) Satisfaction of wealthy people and th

  • Q : Problem of Financial Capital for direct

    The direct economic resources a farmer employs to generate avocadoes would not comprise: (I) human capital in form of expertise regarding growing avocadoes. (II) fertile land. (III) loans from a bank to finance SUCH year’s crop. (IV) machinery,