Shutdown Point


The concept describes the fundamental principle of the shutdown point. It explains at what point shutdown occurs, the strengths and weaknesses of the concept and provides straightforward advice on calculating the shutdown point.

Technique Overview

Shutdown Point

Shutdown Point Definition

A company will shut down in the short run if its average variable costs (AVC) exceed price at all output rates. The output at which price equals the AVC is called the shutdown point. At this rate of production the company is indifferent between producing and shutting down (McEachern, 2010).

Shutdown Point Description *

* The full technique overview will be available soon. Contact us to register your interest in our business management platform, and learn all about Shutdown Point.

Business Evidence

Strengths, weaknesses and examples of Shutdown Point *

* The business evidence section is for premium members only. Please contact us about accessing the Business Evidence.

Business Application

Implementation, success factors and measures of Shutdown Point *

* The business application section is for premium members only. Please contact us about accessing the Business application.

Professional Tools

Shutdown Point videos and downloads *

* The professional tools section is for premium members only. Please contact us about accessing the professional tools.

Further Reading

Shutdown Point web and print resources *

Shutdown Point references (4 of up to 20) *

  • Adelman, M.A., Stangle, B.E. (1985) Profitability and Market Share. In: Fisher, F.M. (ed.) Antitrust and Regulation: Essays in Memory of John J. McGowan. MIT Press, US.
  • Boyes, W., Melvin, M. (2008) Economics, Houghton Mifflin, US.
  • Brito, D.L., Curl, R.F. (2010) Economics of Pricing Cost of Carbon Dioxide Restrictions in the Production of Electricity. James A. Baker III Institute for Public Policy. Available at: http://www.bakerinstitute.org/publications/BI-pub-BritoCurlCO2ElecEcon-070210.pdf.
  • Carney, D. (2001) Commentary: Predatory Pricing: Cleared for Takeoff. BusinessWeek, May 14. Available at: http://www.businessweek.com/magazine/content/01_20/b3732075.htm.

* The further reading section is for premium members only. Please contact us about accessing the further reading.


Learn more about KnowledgeBrief Manage and how you can equip yourself with the knowledge to succeed on Shutdown Point and hundreds of other essential business management techniques

Other members were also interested in...

Related Concept: Consolidated Planning

Consolidated planning in project management integrates scope, schedule, budget, risk, quality, and resources into a cohesive strategy. It ensures alignment of project components for effective execution and success.