In the 60s when Professor Steven Cheung was taking his oral exam on price theory, his teacher asked the following question:
Under perfect competition, the best firms in the market can do is to cover their costs of production. The question is why these firms do not quit producing?
1 comment:
Because all cost in economics are opportunity cost, no exception for the cost of production in question. So, there is nothing else better for the firm to do.
Post a Comment