If you're seeing this message, it means we're having trouble loading external resources on our website. Show If you're behind a web filter, please make sure that the domains *.kastatic.org and *.kasandbox.org are unblocked. Recommended textbook solutions
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Financial Accounting4th EditionDon Herrmann, J. David Spiceland, Wayne Thomas 1,097 solutions What happens to a perfectly competitive firm in the short run?In the short run, the perfectly competitive firm will seek the quantity of output where profits are highest or—if profits are not possible—where losses are lowest. In this example, the short run refers to a situation in which firms are producing with one fixed input and incur fixed costs of production.
What happens in the long run and short run in a perfectly competitive market?In a perfectly competitive market, firms can only experience profits or losses in the short run. In the long run, profits and losses are eliminated because an infinite number of firms are producing infinitely divisible, homogeneous products.
When should a firm continue to produce in the short run?If price falls below average total cost, but remains above average variable cost, the firm will continue to operate in the short run, producing the quantity where MR = MC doing so minimizes its losses. If price falls below average variable cost, the firm will shut down in the short run, reducing output to zero.
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A perfectly competitive firm will continue producing in the short run as long as it can cover its
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