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Perfect Competition - The Shut Down Price

Level:: A-Level, IB

Board:: AQA, Edexcel, OCR, IB, Eduqas, WJEC

Last updated 3 Jul 2018

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A business needs to make at least normal profit in the long run to justify remaining in an industry but in the short run a firm will produce as long as price per unit > or equal to average variable cost (AR = AVC). This is called the shutdown price in a competitive market.

Revision Video: Perfect Competition in the short run including The Shut Down Price