a. A profit-maximizing firm incurs an economic loss of $30,000 per year. Its fixed cost is $25,000 a year. Should the firm produce or shut down in the short run?
b. Suppose instead that the firm has a fixed cost of $35,000 per year. Should the firm produce or shut down in the short run?

Question

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The Answer of a. A profit-maximizing firm incurs an economic loss of $30,000 per year. Its fixed cost is $25,000 a year. Should the firm produce or shut down in the short run?
b. Suppose instead that the firm has a fixed cost of $35,000 per year. Should the firm produce or shut down in the short run?

A a Profit-Maximizing Firm Incurs an Economic Loss of $30,000