In the theory of the firm, the shutdown point in the short run occurs when:
A. Price equals average total cost
B. Price equals average variable cost
C. Price equals average fixed cost
D. Price equals marginal cost
Answer: Option B
Solution (By JKSSB Mock Tests)
A firm continues to operate in the short run as long as price covers average variable cost. If price falls below AVC, the firm shuts down to minimise losses.
Explanation:
GST is largely regressive because lower-income groups spend a higher proportion of their income on consumption, bearing a relatively higher tax burden compared to higher-income groups.
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