<p>I think I understand the problem now, your AVC(Q) is wrong. Your fixed costs are 4000, because it's what the firm will pay after it stops production. VC=TC-4=Q^3+2. Thus AVC=Q^2+2/Q. Now you should use your calculus in order to find where AVC has local positive minimum (because it doesn't have global minimum due to its hyperbolic nature).</p>

CC BY-SA 3.0
2018-01-08T15:27:10.103Z
... and that is exactly at p=3
Thank you very much, you are a genious! ^^
elfinorr
CC BY-SA 3.0
2018-01-09T08:45:39.783Z
@elfinorr Thanks, but are you sure that you calculated everything correctly? Shutdown price is when P=min AVC, and my calculations make me believe, that Q=3 is NOT its local minimum
KarmaPeasant
CC BY-SA 3.0
2018-01-09T16:56:17.530Z
But Q = 1 is, and AVC(1) = 3. It seems to be okay.
elfinorr
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2018-01-09T19:36:52.690Z
Ooops, sorry, my mistake. Everything is OK.
KarmaPeasant
CC BY-SA 3.0
2018-01-08T13:20:17.207Z
2018-01-08T15:23:03.340Z
2018-01-08T15:23:03.340Z
KarmaPeasant
<p>could you help me to solve the task, please? The task is following.
Total costs of the сompetitive firm are $TC = Q^3 +6$ (Q in thousands \$). If the production is stopped then monthly costs are 4000\$. At what prices the company that maximising profit should shut off the production?<br/><br/>
I know that if $P &lt; minAVC$, then the company should stop producing. 
So $VC = Q^3$ then $AVC = \frac{Q^3}{Q} = Q^2$ and $minAVC = 0$
So I get $P&lt;0$ that sounds stupid. And I don't even know how to use that 4000\$.
The answer should be $P&lt;3$
Could you help me to find out how to solve this? <br/>
Thank you in advance.</p>

CC BY-SA 3.0
2018-01-08T13:27:53.533Z
Realistically, you can get VC=0 only if Q=0.But if Q=0, then you do NOT have AVC, because **you would divide by zero**.
KarmaPeasant
CC BY-SA 3.0
2018-01-08T13:30:36.430Z
"(I made a mistake, there was 'AC=Q^3', but still, not ATC)"  AC is just shorthand for ATC, as far as I know.
KarmaPeasant
CC BY-SA 3.0
2018-01-08T13:37:18.223Z
oh, didn't know that. it was just a typo. But still, any thoughts what should I do to get a correct answer? :D
elfinorr
CC BY-SA 3.0
2018-01-08T13:53:04.607Z
One more thing, I think it's strange that according to function of TC the fixed costs are $6000 (when Q=0), but then you say that fixed costs will be  4000 dollars if the firm stops.
KarmaPeasant
<microeconomics>
Shutting off production in short term
elfinorr
# Shutting off production in short term

(Asked by: username_0 on 2018-01-08)

could you help me to solve the task, please? The task is following.
Total costs of the сompetitive firm are $TC = Q^3 +6$ (Q in thousands \$). If the production is stopped then monthly costs are 4000\$. At what prices the company that maximising profit should shut off the production?  
  
I know that if $P < minAVC$, then the company should stop producing.
So $VC = Q^3$ then $AVC = \frac{Q^3}{Q} = Q^2$ and $minAVC = 0$
So I get $P<0$ that sounds stupid. And I don't even know how to use that 4000\$.
The answer should be $P<3$
Could you help me to find out how to solve this?   
Thank you in advance.

**Tags:** microeconomics

> **Comments:**
> **username_1**: Realistically, you can get VC=0 only if Q=0.But if Q=0, then you do NOT have AVC, because **you would divide by zero**.  
> **username_1**: "(I made a mistake, there was 'AC=Q^3', but still, not ATC)"  AC is just shorthand for ATC, as far as I know.  
> **username_0**: oh, didn't know that. it was just a typo. But still, any thoughts what should I do to get a correct answer? :D  
> **username_1**: One more thing, I think it's strange that according to function of TC the fixed costs are $6000 (when Q=0), but then you say that fixed costs will be  4000 dollars if the firm stops.  

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## 1 answers

### Answer by username_1 on 2018-01-08. Score: 0 | Accepted answer

I think I understand the problem now, your AVC(Q) is wrong. Your fixed costs are 4000, because it's what the firm will pay after it stops production. VC=TC-4=Q^3+2. Thus AVC=Q^2+2/Q. Now you should use your calculus in order to find where AVC has local positive minimum (because it doesn't have global minimum due to its hyperbolic nature).

> **Comments:**
> **username_0**: ... and that is exactly at p=3 Thank you very much, you are a genious! ^^  
> **username_1**: @username_0 Thanks, but are you sure that you calculated everything correctly? Shutdown price is when P=min AVC, and my calculations make me believe, that Q=3 is NOT its local minimum  
> **username_0**: But Q = 1 is, and AVC(1) = 3. It seems to be okay.  
> **username_1**: Ooops, sorry, my mistake. Everything is OK.  

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