1.Why would suppliers be willing to accept prices that cover variable costs, but

Question

1.Why would suppliers be willing to accept prices that cover variable costs, but do not cover total costs?  How does the answer depend on whether the decision is a short-run or long-run decision? Make sure you use the textbook and class notes to answer these questions using the rules of maximizing profits and minimizing losses.

2. On the answer sheet shade the loss minimizing level of output for this firm or describe the area if you can

Why would suppliers be willing to accept prices that cover variable costs, but do not cover total costs? How does the answer depend on whether the decision is a short-run or long-run decision? Make sure you use the textbook and class notes to answer these questions using the rules of maximizing profits and minimizing losses. On the answer sheet shade the loss minimizing level of output for this firm or describe the area if you can't shade the graph.

Explanation / Answer

http://www.daviddfriedman.com/Academic/Price_Theory/PThy_Chapter_13/PThy_Chapter_13.html

http://bds-ethiopia.net/costcalculating.html

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