If a Firm Operates at a Loss,the Loss Is Equal

question 105

Essay

If a firm operates at a loss,the loss is equal to TC - TR.If the firm shuts down instead,its loss is equal to FC.Given this,show that price must exceed AVC for the firm to operate at a loss and not shut down.

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Definitions:

Financing Activities

Transactions and events that affect the long-term liabilities and equity of an organization, such as issuing stocks or bonds, and repaying bank loans.

Decrease

The act of becoming smaller or fewer in size, amount, intensity, or degree; a reduction in value or quantity.

Accounts Payable

This term refers to the amounts owed by a company to suppliers or creditors for goods and services received but not yet paid for.

Sale Of Machinery

The process of transferring ownership of a piece of industrial equipment or machinery from one entity to another, usually in exchange for money.