Question
Provide examples from the news of firms in perfectly competitive markets. Talk about how costs impact these firms' profitability. EXAMPLE #2: In this case, the
Provide examples from the news of firms in perfectly competitive markets. Talk about how costs impact these firms' profitability.
EXAMPLE #2:
In this case, the firm will have to pay the fixed costs. However, at any price between the breakeven and the shutdown, the firm will receive an additional contribution to help recover its FC. This will allow it to continue to operate in the short run. In the simulation, I made several errors when applying the correct cost to a product. For instance, fixed costs can affect the business's products in the short term. However, the company can still level out its charges in the long run by returning to its previous price. As a business owner, I believe that marginal cost should be applied to every aspect of your operation. One of the most critical factors you should consider is not producing more than you can sell. (Response here)
EXAMPLE #1:
The factors that would determine if I should enter or exit the market are the availability of the target market and the flexibility of the market. Low availability means greater competition, making the market shrink and forcing businesses to decide if it's worth the risk. If I were a business owner, I would look into the market and determine the maximum amount of products I could produce to leave with the most revenue possible. While not overproducing and costing me money, I would also not under-producing and leaving the potential revenue on the table. Regarding fixed costs, I understand that businesses usually stick with a short-term solutions. The growth of the company can reduce short-run costs. These costs can be spread more efficiently and effectively in the long run. In the short run, they are more expensive than they are in the long run, but with them eating this cost, they can now produce at a lower price and help the business grow.
(Response here)
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