Principles of Microeconomics / Unit 7 MIC 0613 short lesson, about 20 seconds
Operating at a Loss
Captions available
The idea
Below the break-even price the firm loses at every quantity. It still chooses where marginal cost meets price, the smallest loss, and compares that loss with shutting down.
In practice
The farm at twenty-two dollars loses eighteen by growing and sixty by not.
Where people slip
Fixed cost is owed either way in the short run; the question is whether producing loses less than not producing.
Your place on the trail
Every lesson rests on earlier ones and opens later ones. Tap any to jump.
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