f1-acca doubt

Let’s say a company has a long term lease where it kust pay rent. Thos is a fixed cost. If the company makes and sells nothing it will still have to pay rent and will make a loss. If the marginal cost (sum of variable costs) are $10 then any selling price over $10 will help the company make a small contribution that can be used to partially cover the rent. To sell enough units to cover all of the fixed costs the company will cut prices to attract customers. It can cut prices all the way down to just above variable costs. The company with the lowest variable costs will be able to have the lowest selling prices and less efficient competitors will be driven from the market.