Monopoly (economics) - Monopolist Shutdown Rule

Monopolist Shutdown Rule

A monopolist should shut down when price is less than average variable cost for every output level. – in other words where the demand curve is entirely below the average variable cost curve. Under these circumstances at the profit maximum level of output (MR = MC) average revenue would be less than average variable costs and the monopolists would be better off shutting down in the short term.

Read more about this topic:  Monopoly (economics)

Famous quotes containing the word rule:

    Your favor containing the question, as to whether I consider myself a “new woman” is before me. As a rule I do not consider myself at all. I am, and always have been a progressive woman, and while never directly attacking the conventionalities of society, have always done, or attempted to do those things which I have considered conducive to my health, convenience or emolument ...
    Belva Lockwood (1830–1917)