Peggy's Kegs sells kegs in a perfectly competitive market.If the firm decides to shut down because of economic losses in the short run,its current loss is _____

Question

Quizplus · Accepted Answer

If Peggy's Kegs decides to shut down in the short run, its current loss would be equal to its fixed costs, as those costs cannot be recovered. In the short run, variable costs can be avoided by shutting down, but fixed costs are still incurred. Therefore, the firm's current loss is equal to fixed cost.

Peggy's Kegs Sells Kegs in a Perfectly Competitive Market