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Short Run versus Long Run
A firm sells 1,000 units per week. It charges $70 per unit, the average variable costs are $25, and the average costs are $65.
a. What should the firm do in the short run? Why?
b. What should the firm do in the long run? Why?
c. At what price would the firm consider shutting down in the short run?
d. At what price would the firm consider shutting down in the long run?
Cyrus runs an Agribusiness, called Modern Pastures Ltd, which specialises in retailing agrichemicals and farm machinery.
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