Shouldnt we always cover all our costs, short-term

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Reference no: EM133502687

Case: You overheard two students' conversation about pricing after a class:

Student 1 - We can drop prices in the short run to cover differential variable and fixed costs. But in the long run, prices must cover all variable and fixed costs.

Student 2 - How is that possible? Shouldn't we always cover all our costs, short-term and long-term?

Required:

an appropriate response to clarify the pricing concept the students are discussing.

Reference no: EM133502687

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