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The size of the fixed costs is irrelevant as it is a sunk cost. [10] The same consideration is used whether fixed costs are one dollar or one million dollars.) On the other hand if VC > R then the firm is not even covering its short-run production costs and it should immediately shut down.
Rate-of-return regulation (also cost-based regulation) is a system for setting the prices charged by government-regulated monopolies, such as public utilities.It attempts to set prices at efficient (non-monopolistic, competitive) levels [1] equal to the efficient costs of production, plus a government-permitted rate of return on capital.
X-inefficiency is a concept used in economics to describe instances where firms go through internal inefficiency resulting in higher production costs than required for a given output. This inefficiency can result from various factors, such as outdated technology, inefficient production processes, poor management, and lack of competition, and it ...
Gov. Kathy Hochul approved a controversial law that will force oil, natural-gas and coal companies to fork over a staggering $75 billion to the state for spewing carbon emissions and contributing ...
A free market does not directly require the existence of competition; however, it does require a framework that freely allows new market entrants. Hence, competition in a free market is a consequence of the conditions of a free market, including that market participants not be obstructed from following their profit motive.
These laws are formed to promote healthy competition within a free market by limiting the abuse of monopoly power. Competition allows companies to compete in order for products and services to improve; promote innovation; and provide more choices for consumers. In order to obtain greater profits, some large enterprises take advantage of market ...
Without a lot of financial discipline, it's actually quite easy in this day and age to end up wasting money. Everywhere you look, temptations to overspend abound. Check Out: 6 Household Staples ...
The more variable costs used to increase production (and hence more total costs since TC=FC+VC), the more output generated. Marginal costs are the cost of producing one more unit of output. It is an increasing function due to the law of diminishing returns , which explains that is it more costly (in terms of labour and equipment) to produce ...