Unformatted text preview: cost but we’re not covering the fixed costs as well. So the business will continue because perhaps demand will increase, but in the short run they’re losing money. MC = MR is below the AVC is where firm should exit because losing money for every output produced (shut down point) Supply curve for firm is the points above the shutdown point where MC = MR = AVC Normal Profit (Economic) = total revenue – total cost but includes opportunity cost Accounting Profit = Total Revenue – total cost (no opportunity cost). Always greater revenue in Accounting Profit...
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This note was uploaded on 02/24/2011 for the course ECON ECON 201 taught by Professor Elzinga during the Spring '09 term at UVA.
- Spring '09