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Business Economics 1

Business Economics

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Title: Business Economics

Essay Details:

Subject: Business

Author: Sonny M

Date: May 25, 2017

Level: University

Grade: A

Length: 11 / 3027

Essay text:

However, in the short run, and providing that the business has sunk fixed costs, it is possible for the firm to continue to earn profit if price is greater than P2; the average variable cost (AVC) of producing Q. Any price below P2 incurs a loss. When analysing whether or not this business should raise its prices, we first need to consider whether it is in a perfect or imperfectly competitive market. In a perfectly competitive market, the price of a product is constant and set by the market, creating the horizontal demand curve D1. Here we can see that even an infinitely small change in price will cause a complete loss of sales...

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