--%>
Assignment Help - homework help

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 : Calculating exchange rate for USA dollar

    If $9 is required to buy £2, what is the exchange rate for USA dollar? Answer: £1 = 9/2 = $4.5, i.e., £1 = $4.5.

    		•
  • Q : Purpose of Balance of Payment Meaning:

    Meaning: - as mentioned above, the balance of payments is a periodic accounting of international economic transactions. Each country having regular economic transactions with other countries prepares periodically the final accounts of their foreign receipts and paymen

    		•
  • Q : Market price decrement according to

    When heroin were legalized, in that case the: (w) market price of heroin would drop considerably. (x) demand would raise although supply would decrease. (y) demand would decrease but supply would increase. (z) price of cocaine would raise.

    Q : Foreign trade eliminate deficient demand

    In what respect foreign trade will be helpful in eliminating the adverse economic influences of deficient demand? Answer: Export increases the demand for services a

    		•
  • Q : Shortage of the good Describe when

    Describe when there will be a shortage of the good?

    		•
  • Q : What is Equilibrium What do you mean by

    What do you mean by the term Equilibrium? Also state its proper definition.

    		•
  • Q : Steps to analyze modifications in

    What are the Steps to analyze modifications in equilibrium?

    		•
  • Q : What is multiplier Multiplier : The

    Multiplier: The Multiplier is the ratio of change in income by the change in investment. Multiplier (k) = ΔY/ΔI

    		•
  • Q : Problem related to rising GDP Between

    Between 1961 and 2007, the rising share of the Canadian population in paid employment contributed to rising GDP per person. But suppose that the share of the Canadian population in paid employment had remained constant between 1961 and 2007. What would Canadian GDP pe

    		•
  • Q : Problem on slope of demand curve The

    The demand curve for DVD games is a straight line, therefore its slope: (1) Is constant, although price elasticity of demand drops/falls as output increases. (2) Price elasticity are both stable. (3) Is constant, although price elasticity of demand increases as the pr

    		•