Economics Study Set 4
Quiz 12: Firms in Perfectly Competitive Markets
In the Short Run,if a Firm Shuts Down It Avoids
In the short run,if a firm shuts down it avoids its variable cost but not its fixed cost.
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In the short run,if a firm shuts down its maximum loss equals the amount of its fixed cost.
The minimum point on the average variable cost curve is called the loss-minimizing point.
If a firm's fixed cost exceeds its total revenue,the firm should stop production by shutting down temporarily.
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