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Question

Which of the following points is the shutdown point?


  1. Minimum point of SAC

  2. Minimum point of AVC

  3. Minimum point of AFC

  4. Minimum point of SMC


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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