Question

If price < AVC: company stops producing

If price > AVC: company produces

But what if price = AVC? What are they gonna do?

Answer 1

The firm is indifferent between to produce and not to produce

because the firm produces at price below ATC and price above AVC to minimize losses, the losses by producing are FC-(P-AVC)*Q and if no production at price between AVC and ATC the loss is equal to fixed cost so the losses minimize by producing if the price is between AVC and ATC but if the price is below AVC then the loss is equal to fixed cost by not producing and by producing its above-fixed cost.

but, here when the price is equal to AVC the losses are same if the firm produces or not to produce so the firm is indifferent in its strategy of production.