When the price of zinc dropped below $1,900, the price dropped below Alcoas price, the company. Application

When the price of zinc dropped below $1,900, the price dropped below Alcoa’s price, the company. 

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Application 3 STRADDLING THE ZINC COST CURVE APPLYING THE CONCEPTS: What is the shutdown price? Zinc is a vital input to the production of steel. Because the cost of mining zinc varies from one mine to another, the shutdown price varies too. The world price of zinc decreased from roughly $2,300 per ton in 2010-2011 to $1,900 in early 2012. The lower price was below the shutdown prices of Alcoa's mines in Italy and Spain: at a price of $1,900, the total revenue from the mines was less than the variable cost of operating the mines. The shut- down of Alcoa's mines decreased mining output by 531,000 tons. Although mines with lower production costs continued mining at a price of $1,900, many mines have shutdown prices in the range $1,500 to $1,900, and will shut down if the price continues to drop.