reasons why afirm wont produce in the short runSolutionThe f

reasons why afirm wont produce in the short run

Solution

The firm\'s production decisions whether for the short term or long term depends on the sales price, total cost, average fixed costs and average variable costs. In the short run, the firm continues to produce until atleast it is able to cover the varibale costs from selling the products as fixed costs are anyway going to be there.

So if the firm decides not to produce in the current period or in short run that means price < variable costs that means the losses will increase if its continue to produce, so the firm will take decision not to produce.