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#cfa #cfa-level-1 #economics #has-images #reading-15-demand-and-supply-analysis-the-firm #section-3-analysis-of-revenue-costs-and-profit
in the long run, to remain in business, the price must cover all costs.
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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, <span>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., the firm will no longer participate in the market. Point D, which corresponds to
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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, <span>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., the firm will no longer participate in the market. Point D, which corresponds to
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