The Shut-down Price, Reconsidered

Michael Sproul

MPRA Paper from University Library of Munich, Germany

Abstract: The textbook assertion that the shut-down price is at the minimum point of average variable cost AVC is shown to be incorrect. Once we properly distinguish between fixed costs and sunk costs, it becomes clear that the shut-down price is at the minimum point of average cost AC.

Keywords: shut; down; price (search for similar items in EconPapers)
JEL-codes: D0 D00 (search for similar items in EconPapers)
Date: 2016-10-16
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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:74837

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