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When demand or price is lower than AVC when MC=MR, the firm will shut down.
The firm incurs smaller loses by shutting down instead of producing at ATC.
| Short Run Shut Down |
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In the long run, the minimum ATC curve will touch the Demand curve
at the output where MR=MC.
| Long Run Break Even |
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Losses are occuring because the ATC curve is above the Demand curve. The
firm's product price does not cover the minimum ATC.
| Short Run Loss |
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By Chantel McCain, Ross McFarland, Iz Altman
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