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→Note on conventions for profit: accounting and not accounting for fixed costs

In particular, the net profit (not accounting for fixed costs) is zero at <math>Q = 0</math>.

The net profit accounting for fixed costs is <math>R - TC</math>, which becomes <math>(P - ~~ATC~~AC) \cdot Q</math>, where <math>AC</math> is the average total cost, including both average fixed costs and average variable costs.

This is smaller than the profit calculated by not accounting for fixed costs. Also, for the short-run choices, this profit value may well be negative, because the firm treats its fixed costs as [[sunk cost]]s.

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