Refer to the attachment for a perfectly competitive firm
This firm should shutdown at any price below:
e) $5© BrainMass Inc. brainmass.com October 9, 2019, 9:19 pm ad1c9bdddf
In the short-run the firm managers must simply try "to cover variable costs", In the short-run they must pay the fixed costs whether they operate or not.
Fixed costs are irrelevant (in the short-run) when ...
This explains the computation of shut down point