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Unformatted text preview: If price < ATC the firms incurs a loss Profit = ( P-ATC) X Q Minimum ATC = break even price long run P > min ATC = profitable P < min ATC = unprofitable P = ATC = than they break even Minimum AVC = shut down prive short run P > min AVC = firm produces in short run P = min AVC = firm indifferent between producing in short or not. Covers variable cost P < min AVC = firm shuts down in short run, does not cover variable costs...
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- Winter '07