3 ms·
In this air freight context, the relevant short concept would be the "shutdown rule" of economics: you keep operating in the short term as long as your revenue
by zerocrates 6y ago
In this air freight context, the relevant short concept would be the "shutdown rule" of economics: you keep operating in the short term as long as your revenue covers your variable costs. If it doesn't, it's cheaper to just not operate at all, but if you're beating the variable costs you're at least minimizing your losses even if you're not covering your fixed costs.
In the long run, you can't ignore the fixed costs forever and you eventually just leave the market altogether.