When the price is less than the average variable cost of production is known as the shutdown rule is True.
A firm will decide to carry out a shutdown of creation when the income got from the offer of the labor and products delivered couldn't in fact take care of the variable expenses of creation.
Actually, shutdown happens in the event that typical income is sub optimal variable expense at the benefit amplifying positive degree of result. Delivering anything wouldn't create sufficient income to counterbalance the related variable expenses; delivering some result would add further costs in overabundance of incomes to the expenses unavoidably being caused (the proper expenses). By not delivering, the firm loses just the proper expenses.
Therefore Option True is correct.
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