What is the difference between a firm’s shutdown point in the short run and in the...
- What is the difference between a firm’s shutdown point in the short run and in the long run? Why are firms willing to accept losses in the short run but not in the long run?
Homework Answers
A firm's shutdown point denotes when it has reached a level where firm can not support the costs with its productions.
In short run a firm can reach reach shutdown point several times but the management can bring it back to life by changing policies, revamping cost-benefit analysis, capital infusion, etc.
However, if a firm gets into shutdown point frequently and persistently over a period of time, a management have to close the firm as it can not induce any more capital as business model has failed.
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What is the difference between a firm’s shutdown point in the
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