Figure 6.3
-Figure 6.3 shows the cost structure of a firm in a perfectly competitive market. If the market price is $3 and the firm shuts down in the short run, its profit is

Question

Quizplus · Accepted Answer

In a perfectly competitive market, if the firm shuts down, its profit is equal to the negative of its fixed costs. Since the firm shuts down, it incurs no variable costs, only fixed costs, which are $900. Therefore, the profit is -$900.

Figure 6.3 -Figure 6.3 Shows the Cost Structure of a Firm in Firm