Exit or shutdown point

Exit or shutdown point - run They will prefer to wait and...

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Exit or shutdown point Firms in a competitive industry have freedom to enter or exit. With the presence of Super Normal profits, outside firms start entering the industry. If, however, some firms are suffering Sub Normal profits or losses, they will not take the decision to withdraw from the market immediately in the short
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Unformatted text preview: run. They will prefer to wait and find out whether market conditions improve to their advantage. If they continue to make losses even in the long run the firms will have ultimately to leave the industry. This decision is governed by the behavior of the firm’s Average Variable Cost curve (AVC) ....
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