Principles of Microeconomics / Unit 7 MIC 0622 short lesson, about 20 seconds
Shutting Down Is Not Exiting
Captions available
The idea
Shutting down is a short-run choice to produce zero while still paying fixed costs, reversible when price recovers. Exiting is a long-run choice to leave the industry and shed the fixed costs too.
In practice
A restaurant closes overnight; it exits when it sells the building.
Where people slip
A firm can shut down and never exit, or exit without ever shutting down. Keep the horizons apart.
Your place on the trail
Every lesson rests on earlier ones and opens later ones. Tap any to jump.
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