![]() To begin our discussion of long-run, we must first remember that The Clip Joint is a price-taker who is receiving price cues from the competitive market. In our example in Topic 7.2, when price was $7.50, we showed The Clip Joint making positive profits in the short run. If the price is below The Clip Joint’s shut-down price, it will shut down in the short-run.If the price is below The Clip Joint’s break-even price, it will continue to operate in the short-run but exit in the long run. ![]() So far we have looked at The Clip Joint in the short-run, while eluding to some of the actions The Clip Joint may take in the LR including: Explain what happens in the long-run after shocks to supply and demand.Differentiate between accounting and economic profits.Understand why positive and negative profits entice entry and exit.By the end of this section, you will be able to:
0 Comments
Leave a Reply. |
AuthorWrite something about yourself. No need to be fancy, just an overview. ArchivesCategories |