Match the following. List-I List-II a. Cross elasticity is zero 1. Price = AVC b. Shut down point 2. Two commodities are independent c. Slutskey theorem 3. Transformation line d. Production possibility 4. Substitution effect

• b. Shut down point

The shut down point is the point at which a firm is producing no output and is just breaking even. At this point, the firm’s revenue is equal to its variable costs, and its profits are zero.

• c. Slutskey theorem

The Slutskey theorem is a theorem in economics that states that the total effect of a change in price on demand can be decomposed into two effects: the substitution effect and the income effect. The substitution effect is the effect of a change in price on the relative prices of goods, and the income effect is the effect of a change in price on real income.

• d. Production possibility

The production possibility frontier is a curve that shows the maximum combination of goods that can be produced with a given amount of resources. It is a graphical representation of the law of diminishing returns.

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