When AR passes through minimum point of AVC, it is called:
A)Breakeven point
B)Shutdown point
C)Normal profit point
D)Supernormal profit point

Question

Quizplus · Accepted Answer

The shutdown point is the level of output and price at which a firm covers its variable costs; it's the point where average revenue (AR) equals average variable cost (AVC). At this point, the firm is indifferent between continuing operations and shutting down temporarily, as it only covers its variable costs without contributing to fixed costs.

When AR Passes Through Minimum Point of AVC, It Is