4/02 - > 0 or if < 0 and <...

Info iconThis preview shows page 1. Sign up to view the full content.

View Full Document Right Arrow Icon
4/02/08 A firm can experience < 0 and still choose > 0 provided that for < FC. (we still call this decision, “operate”) but suppose > FC and < 0. Then the firm chooses = 0. We call this decision “shut down.” Rule In the short run, a firm operates if
Background image of page 1
This is the end of the preview. Sign up to access the rest of the document.

Unformatted text preview: &gt; 0 or if &lt; 0 and &lt; FC. Otherwise, the firm shuts down. In the long run, a firm only operates if &gt; 0, otherwise the firm exits. We can use this rule to derive the firms short and long run supply curves....
View Full Document

Ask a homework question - tutors are online