The shut down price corresponds to the minimum point on the AVC curve. Another competitive firm story. The pilferage problem is a variable cost while the vandal problem is a fixed cost. This one is for you to work on. In the textbook model, there is perfect information under competition, therefore there are no trade secrets that will enable a firm to enjoy a significant cost advantage for any extended period of time.
Firms maximize their profits.
Firms will temporarily suspend product if total revenue falls below total variable costs. Talk about entry barriers. Thus, even if the gains from monopoly power could be transferred to consumers, social welfare will still be less than under competition because output is still below the competitive level. The monopolist faces a downward sloping demand curve. If the price is lowered, it will sell more.