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wrote...
Posts: 161
2 months ago
"A firm should shut down immediately when it earns zero economic profits." Do you agree or disagree? Explain your answer.
Source  Download
Economics Today: The Micro View
Edition: 19th
Author:
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wrote...
Posts: 173
2 months ago
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Disagree. When a firm earns economic profits or breaks even, the price per unit of output sold still exceeds the average variable cost so that it is better off continuing to produce. The revenues in excess of variable costs can be used toward covering fixed costs. Only if the price per unit of output falls below the average variable cost that the firm should shut down.
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