Should production be discontinued by the firm in the short-run when $A R = A V C$ ?

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Solution

When $A R = A V C$ , the firm is is just able to cover its variable cost in the short-run. The loss that the firm is incurring in this case is of the total fixed cost, which it would still have to bear if it decides to stop operating in the short run. Thus, a firm is expected to operate in the short-run until it is able to cover its variable costs, though it may also decide to suspend production of the commodity for the time being.

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Should production be discontinued by the firm in the short-run when AR=AVC?

Should production be discontinued by the firm in the short-run when $A R = A V C$ ?