Question

Shut-down point means shutting down of the firm. Discuss.

Answer 1

Shut-down point occurs when a firm is just able to cover its variable cost, which means $TR=TVC$ in the short-run. The loss that the firm is incurring in this case is 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.
The firm would exit the industry when it is not able to cover all its costs, i.e. when $TR<TC$ or $AR<AC$ in the long run.