A firm under perfect competition will not suspend production even when price is less than AC but it will definitely do so if price is less than AVC explain the fact using a suitable diagram

Dear student,
The shut-down point refers to a situation when the firm is able to cover its variable cost only i.e AR = AVC.
At the shutdown point, the firm incurs a loss of fixed cost. The firm does not stop the production at this point as the fixed cost will still be incurred. However, if the price falls and the firm is unable to cover even it's variable cost then it will shut down the operations.
Regards.
 

  • 6
hahah if i knew that where ill be 
if anyoe knows the ans pls help
 
  • -4
What are you looking for?