A catfish farmer will shut down production when

Question

Quizplus · Accepted Answer

Price falling below AVC means that the cost to produce each unit of catfish is higher than what the farmer is able to sell it for. Continuing production in this case would mean the farmer would be losing money on each sale, making it a wise decision to shut down production until prices increase. Total revenue falling below total costs is also a factor, but it may not be the best indicator to use alone since fixed costs may still exist and shutting down production completely may not be the most optimal solution.

A Catfish Farmer Will Shut Down Production When