Explain Why a Firm Can Continue to Operate in the Short

question 163

Essay

Explain why a firm can continue to operate in the short run when it cannot cover its average total costs but in the long run must shut down.

---

Definitions:

Reaction Formation

A defense mechanism where an individual behaves in a manner opposite to their actual feelings or impulses.

Association

A connection or correlation between two or more entities, often used in psychology to refer to the link between thoughts, feelings, or experiences.

Cruelty

Deliberate actions or behavior that causes pain or suffering to others, often indicative of a lack of empathy.

Repression

A defense mechanism where unpleasant thoughts, feelings, or desires are excluded from consciousness as a protective measure.