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Shut-Down Situations in the Short-Run

a)      When AR< AC but AR is still greater than AVC.

(Or AVC lies below P = MR = AR = D)

285_short run.png

If the firm continues production,

TR             =       ______

TC             =       ______

LOSS        =       ______

If the firm shuts down,

TFC           =       LOSS     = ______

b)      When AR < AC as well as AVC

(Or both AC and AVC curves lie above P = MR = AR = D)

876_short run1.png

If the firm continues production,

TR             =       ______

TC             =       ______

LOSS        =       ______

If the firm shuts down,

TFC           =       LOSS    = ______

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