Shutdown point referes to the state of loss in short run where a firm need to decide whether to continue with production activity or to suspend it. This point is decided under which condition? 1. AR = AVC 2. AR = MC 3. AR = TVC 4. AR = AC

The correct answer is: C. Only 1.

The shutdown point is the point at which a firm’s revenue is equal to its variable costs. At this point, the firm is not making any profit, but it is also not incurring any losses. If the firm were to produce any less than this amount, it would start to incur losses.

Option 1: AR = AVC. This is the correct answer. At the shutdown point, the firm’s revenue is equal to its variable costs.

Option 2: AR = MC. This is not the correct answer. At the shutdown point, the firm’s revenue is not necessarily equal to its marginal cost.

Option 3: AR = TVC. This is not the correct answer. At the shutdown point, the firm’s revenue is not necessarily equal to its total variable costs.

Option 4: AR = AC. This is not the correct answer. At the shutdown point, the firm’s revenue is not necessarily equal to its average cost.