If a perfectly competitive firm is experiencing a sustained pattern of losses in the long run, it will likely _____________.

1 answer:

4 0

If a perfectly competitive firm is experiencing a sustained pattern of losses in the long run, it will likely to reduce production or shut down.

<h3>How losses affect the short run and long run competitive firm?</h3>

The line separating the short run and the long run cannot be precisely determined by a stopwatch or even a calendar. Depending on the specific industry, it varies.
In the near term, businesses are unable to change how they use fixed inputs, but over the long run, they are able to change every aspect of production.
Profits are a red cape that propels businesses forward in a cutthroat market.
Depending on whether its sales are sufficient to cover its variable costs, a company that experiences short-term losses will either continue to operate inefficiently or just close its doors.
Over time, however, companies that are losing money will significantly reduce, if not completely stop, their manufacturing.
Exit is the process of gradually reducing production in response to a consistent pattern of losses.

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