Assume that the market price per kilogram of beet pulp is $0.3 and many relatively identical farms produce beets. The typical farm has a minimum average variable cost of $0.26 and a minimum average total cost of $0.31. Should it shut down given the current price? Why? Now assume that this farm's average variable and total costs increase by $0.06 for each level of output, while the other farms' costs remain the same as before. What should the farm do now? Why?

Assume that the market price per kilogram of beet pulp is $0.3 and many relatively identical farms produce beets. The typical farm has a minimum average variable cost of $0.26 and a minimum average total cost of $0.31. Should it shut down given the current price? Why? Now assume that this farm's average variable and total costs increase by $0.06 for each level of output, while the other farms' costs remain the same as before. What should the farm do now? Why?

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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