A firm encounters its shut down point when ........

Economics- Phase (I & II) Business Cycles

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A firm encounters its shut down point when:

Average variable cost equals price at the profit maximising level of output

Average total cost equals price at the profit maximising level of output

Average fixed cost equals price at the profit maximising level of output

Marginal cost equals price at the profit maximising level of output

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Explanation:

The shutdown point denotes the exact moment when a company's (marginal) revenue is equal to its variable (marginal) costs—in other words, it occurs when the marginal profit becomes negative. At this point, there is no economic benefit to continuing production.