Price and Output Determination

短期:简而言之run, a firm has to decide about the output it should produce at the market price so that profit is maximum. Some inputs of production are fixed in the short run, which gives rise to fixed costs. These costs should be incurred whether the firm produces or not. A firm may stay in business to cover these costs even if it incurs losses. Thus, a firm may try to maximize profits or minimize losses in the short run. The cost functions of firms are different as factors of production are not homogeneous. Therefore, each firm has different profit levels.

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