The largest loss a profit-maximising perfectly competitive firm can incur in the short run equals its

Question

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The largest loss a profit-maximizing perfectly competitive firm can incur in the short run equals its total fixed cost. This is because, in the short run, a firm will continue to produce as long as it can cover its variable costs, even if it cannot cover its total costs. The fixed costs are sunk in the short run, so the maximum loss is limited to these fixed costs.

The Largest Loss a Profit-Maximising Perfectly Competitive Firm Can Incur