Answer to Question #249003 in Microeconomics for Ema

Question

How to calculate shutdown ponit

Answer 1

The three main factors that help in determining shutdown point of a business are:

1. How much variable cost goes into producing a good or service.
2. The marginal revenue received from producing that good or service.
3. The types of goods or services provided by the firm.

As shown by the graph above, the shutdown point is the output level at the minimum of the average variable cost curve.