Question

Discussion: Primary Difference in the Short Run and the Long Run

"In the short run, if I can cover my variable costs, I will continue to produce, ignoring my fixed costs. If I cannot cover my variable costs, I will shut down to minimize losses." Is this statement accurate? Why or why not?

"In the long run, if I can cover my variable costs, I will continue to produce. If I cannot cover my variable costs, I will shut down." Is this statement accurate? Why or why not?

Answer 1

1) :- the primary difference between short run and Long run is that under short run alteast one sources are fixed while under long run all resources are variable .

No fixed factor understand long run while fixed And variable both factor are in the short run.

2) :- this statement is true or accurate that In the short run, if I can cover my variable costs, I will continue to produce, ignoring my fixed costs. If I cannot cover my variable costs, I will shut down to minimize losses."

The answer is that shutting down can reduce variable amount equal to zero SO if producer under short run earn less than avc he instantly close -the production because in short run he is already paying fixed that means at the quantity production which is equal to zero still he would make lossess because he still in any conditions would need to pay, fixed cost so whenever country experiencing losses he should follow above statement .