D 15. A firm is seeing a $500 loss in the short run. The fixed cost of operation for this firm is $1,000. What is...

Question

Question

Answer 1

Answer #1

The current loss of the firm in the short run is $500.

The fixed cost of firm is $1,000.

In short-run, firm has to incur fixed cost, even if, it does not produce any output.

So, in given case, if firm shut down then its loss would be equal to $1,000.

This loss would be greater than its current loss.

So, it would be beneficial for firm to remain in operation.

Thus,

The best decision for this firm in the short run is that this firm should not shut down production in the short run.

Answer 2

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