GK
INDIAN ECONOMY
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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variable cost
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fixed cost
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average cost
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marginal cost
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Detailed explanation-1: -Yes in the short run. In the short run, a firm continues to cope with losses so long as AR≥AVC, because, by covering variable costs, the firm is incurring the loss of fixed cost only which it has to incur even when production is discontinued.
Detailed explanation-2: -The short-run cost comprises both the fixed cost (that do not differ with the change in the degree of end results) and variable cost (that differs with the changes in the level of degree of end results). Some factors remain constant or fixed due to the time restrictions forced on an establishment.
Detailed explanation-3: -Short-run is a period when some factors of production are fixed and some are variable. Output can be increased only by increasing the application of the variable factor. In the short run, the scale of production remains constant. The long run is a period when all factors of production are variable.