Macmillan Learning
Perfect Competition — End of Chapter Problem
The COVID-19 pandemic in 2020 led to a period of lockdowns where businesses experienced a steep decline in the number of
customers, making it difficult to cover their variable costs. Although a firm can generally minimize its losses by shutting down
under these conditions, certain real-life circumstances might create an exception to this rule.
Why might some businesses have stayed open during the pandemic, despite having very few customers?
Sometimes, fewer customers lead to higher profits.
Businesses may have remained open to receive stimulus funds, which were conditioned on remaining open.
Many businesses may have seen this period as temporary and thus not worth eliminating their workforces over.
Some businesses may have used this slow period to expand their capacity and enhance their efficiency.
