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Study Notes

Perfect Competition - The Shut Down Price

Level:
A-Level, IB Diploma
Board:
AQA, Edexcel, Eduqas, IB, OCR, 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

Perfect competition in the short run - revision video
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