Higher Economics Exam April 28thWatch
What is the "shutdown position" ?
Why would a firm continue to produce if it was making a loss?
Thank you to those who can help and good luck to everyone sitting the paper!
If the firm is able to pay its variable costs then any additional revenue it receives will be able to contribute to paying their fixed Fixed Costs.
If a firm shuts down it will still have to pay it's fixed costs and therefore this is why a firm should remain in operation (providing it can cover variable costs) if they are making a loss.