A monopoly firm produces an optimal output of 20 units that are sold at $70 per unit. The firm makes a negative profit and incurs a total variable cost of $1000. Explain what the firm should do? 1) The firm should shut-down operations. 2) The firm should continue to produce at a price of $70 per unit. 3) The firm should continue to produce but increase price to $100 per unit. 4) The firm should continue to produce but lower price to $50 per unit.

A monopoly firm produces an optimal output of 20 units that are sold at $70 per unit. The firm makes a negative profit and incurs a total variable cost of $1000. Explain what the firm should do? 1) The firm should shut-down operations. 2) The firm should continue to produce at a price of $70 per unit. 3) The firm should continue to produce but increase price to $100 per unit. 4) The firm should continue to produce but lower price to $50 per unit.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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