How does a firm that is losing money in the short run decide whether to shut down or continue to produce to minimize its losses?
The firm should continue to produce in the short run if TR exceeds TVC; if TR falls below TVC, the firm should shut down.
Economics
You might also like to view...
The guiding function of price is
A) the movement of price to clear the market of any shortages or surpluses. B) the use of price as a signal to guide government on the use of market subsidies. C) a long-run function resulting in the movement of resources into or out of markets. D) the movement of price as a result of changes in the demand for a product.
Economics
The following graph shows average fixed costs, average variable costs, average total costs, and marginal costs of production.
Average variable cost is minimized when output equals:
A. 21 units. B. 25 units. C. 12 units. D. 6 units.
Economics