7. Fixed cost is irrelevant to the firms optimal short -run production decision, which depends on its
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7. Fixed cost is irrelevant to the firm’s optimal short -run production decision, which depends on its shut-down price—its minimum average variable cost—and the market price. The decision to ignore fixed costs is similar to the decision to ignore sunk costs, nonrecoverable costs that have already been incurred. When the market price is equal to or exceeds the shut -down price, the firm?
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Related Book For
Essentials Of Economics
ISBN: 9781429218290
2nd Edition
Authors: Paul Krugman, Robin Wells, Kathryn Graddy
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