Question

A firm would not be willing to produce in the long run at prices below this level because A. profit would be negative and the firm would be better off exiting the industry since there are no variable production costs. B. profit would be positive and the firm would be better off exiting the industry once fixed production costs are incurred. C. profit would be negative and the firm would be better off exiting the industry and incurring opportunity costs. D. profit would be negative and the firm would be better off exiting the industry since there are no fixed production costs.

Answer 1

Answer:D. profit would be negative and the firm would be better off exiting the industry since there are no fixed production costs.

Explanation: Cost is a word used to describe the amount spent in executing a project or during the production process of a particular product or service, it can be variable or fixed cost.

A fixed cost is a cost that is associated with a company's fixed assets like the cost of Installation of equipments,cost of buildings etc.

Variable costs are costs that are incurred during the day to day running of the business such as daily wage payments,cost of raw materials etc

IN THE LONG RUN, ALL THE FIXED COST OF A BUSINESS MUST HAVE BEEN ACCOUNTED FOR, SO ALL COSTS ARE VARIABLE, AND THUS ALL COSTS MUST BE COVERED IF THE BUSINESS IS TO REMAIN CONTINUE ITS OPERATIONS.