Shutdown (economics)
In economics, a firm will shutdown production when the revenue received from the sale of the goods or services produced cannot even cover the variable costs of production. In that situation, the firm will experience a higher loss when it produces, compared to not producing at all.
Technically, shutdown occurs if marginal revenue is below average variable cost at the profit-maximizing output. Producing anything would not generate returns significant enough to offset any fixed cost and part of the variable cost. By not producing, the firm loses only the fixed cost.
Read more about Shutdown (economics): Explaining, Long-run Consequences, Example, Monopolist Shutdown Rule, Calculating The Shutdown Point, Universal Shutdown Rule