When is a firm’s shutdown point equal to the minimum point on its average cost curve?

 Question: When is a firm’s shutdown point equal to the minimum point on its average cost curve?

Solution: A firm’s shutdown point is equal to the minimum point on its average cost curve in the short run. This is because the average cost comprises of the sum of average fixed cost and the average variable cost. The average fixed cost has to be incurred by the firm even if the firm makes no business. Thus when a firm shuts down in the short run it will equal to the minimum point on its average cost curve.