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Explain why a loss-making firm in perfect competition

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Reference no: EM133123857

Explain why a loss-making firm in perfect competition would shut down in the long run. Provide a real-world example.

Answers may include

-Definitions of perfect competition and long run

-Diagram(s) to show the shut-down point in perfect competition

-An explanation why a firm shuts down in the long run when a loss-making firm can cover its variable costs in the short run but cannot cover its total costs in the long run

-Examples of markets which have features of perfect competition

Reference no: EM133123857

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