Which of the following points is the shutdown point?

Minimum point of SAC

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Minimum point of AVC

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Minimum point of AFC

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Minimum point of SMC

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Solution

The correct option is B
Minimum point of AVC

A firm should shut down temporarily if the price is less than the minimum point of the average variable cost. Hence the minimum point of AVC is the shutdown point.

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Why does the SMC curve cut the AVC curve at the minimum point of the AVC curve?

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