The shut-down point for the firm is the output of lowest _________.

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AVC

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Price

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Solution

The correct option is C AVC
The shut down point is said to occur, where price (average revenue AR) is less than average variable costs (AVC). At this price (AR<AVC), the firm is making an operating loss. The total revenue is less than operating (variable) costs. It is the point where firm would incur only losses if it decides to continue.

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