Due to the fact most gadgets MC might possibly be large based on legislation from diminishing efficiency, MR would be below MC; that is, the business do losings gain generating extra equipment. For this reason, here is the cash increasing productivity level.
In this instance, the businesses economic losses translates to their full repaired costsThe shutdown point is the level of output and price at which the firm just covers its total variable cost. If the MR of the product is less than the minimum average variable cost (min AVC), the firm will shut down because this action minimizes the firms loss. If MR < min AVC, then each additional unit produced would increase the loss. For pure competition, MR is equal to price as the firm is facing a perfectly elastic demand. Therefore, for short run, if Price < min AVC, then the firm should shut down. If Price > min AVC, then [...]
