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MICROECONOMICS CH : 10 PRODUCER'S EQUILIBRIUM — Economics STD 11 Commerce — Question

CBSE BoardEnglish MediumSTD 11 CommerceEconomicsMICROECONOMICS CH : 10 PRODUCER'S EQUILIBRIUM2 Marks
Question
Should production be discontinued when AR = AVC?
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Answer

Not necessarily. When AR=AVC, the firm is incurring the loss of fixed costs. This loss is to be borne by the firm no matter it continues production or not. The producer, therefore, may or may not discontinue production when: AR = AVC.

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