#economics
By shutting down in a short run a firm avoids all variable costs.
[21] However, the firm must still pay fixed costs.
[22]
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Perfect competition - Wikipedia[19] Restated, the rule is that for a firm to continue producing in the short run it must earn sufficient revenue to cover its variable costs.[20] The rationale for the rule is straightforward: <span>By shutting down a firm avoids all variable costs.[21] However, the firm must still pay fixed costs.[22] Because fixed costs must be paid regardless of whether a firm operates they should not be considered in deciding whether to produce or shut down. Thus in determining whether to shut dow Summary
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