Do you want BuboFlash to help you learning these things? Or do you want to add or correct something? Click here to log in or create user.
#cfa #cfa-level-1 #economics #has-images #reading-15-demand-and-supply-analysis-the-firm #section-3-analysis-of-revenue-costs-and-profit
If P < AVC, the firm will shut down operations and simply absorb the unavoidable fixed costs. This problem occurs at output Q1, which corresponds to point C where price is less than average variable cost.
If you want to change selection, open document below and click on "Move attachment"
Open it
osts in the short run as a business entity. In the short run, a business is capable of operating in a loss situation as long as it covers its variable costs even though it is not earning sufficient revenue to cover all fixed cost obligations. <span>If variable costs cannot be covered in the short run (P < AVC), the firm will shut down operations and simply absorb the unavoidable fixed costs. This problem occurs at output Q 1 , which corresponds to point C where price is less than average variable cost. However, in the long run, to remain in business, the price must cover all costs. Therefore, in the long run, at any price below the breakeven point, the firm will exit the market, i.e.,
Open it
osts in the short run as a business entity. In the short run, a business is capable of operating in a loss situation as long as it covers its variable costs even though it is not earning sufficient revenue to cover all fixed cost obligations. <span>If variable costs cannot be covered in the short run (P < AVC), the firm will shut down operations and simply absorb the unavoidable fixed costs. This problem occurs at output Q 1 , which corresponds to point C where price is less than average variable cost. However, in the long run, to remain in business, the price must cover all costs. Therefore, in the long run, at any price below the breakeven point, the firm will exit the market, i.e.,
Summary
| status | not read | reprioritisations | ||
|---|---|---|---|---|
| last reprioritisation on | suggested re-reading day | |||
| started reading on | finished reading on |
Details
Discussion
Do you want to join discussion? Click here to log in or create user.