What is the shut-down condition for a firm? Can any one explain shut-down condition. Specificaly about cost curve.
In a nut-shell, a business should only make a product if there is a profit in it. There is a profit point, a break-even point, and a shut-down point. At the break-even point, the company spends as much on manufacturing and marketing the product as it makes. Basically, there is no money to be made at the break-even point.
The shut-down point is the point where the company would rather stop producing the product. There is no money to be made. If the money earned is less than the cost, then the firm needs to shut down. If you continue producing, you will lose money.
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