The Firm's short-Run decision to shut down The firm shuts down if the revenue it gets from producing is less than the variable cost of production ● Shut down if tr<VC Shut down if TR/Q<VC/Q ● Shut down if p<AVC o The portion of the marginal-cost curve that lies above average variable cost is the competitive firms short-run supply curveThe Firm’s Short-Run Decision to Shut Down • The firm shuts down if the revenue it gets from producing is less than the variable cost of production. • Shut down if TR < VC • Shut down if TR/Q < VC/Q • Shut down if P < AVC • The portion of the marginal-cost curve that lies above average variable cost is the competitive firm’s short-run supply curve