Q: An ice cream shop owner is deciding whether or not to keep her ice cream shop open during the…
A: Fixed costs are defined as the costs incurred at the time of setting up of the business such as…
Q: Suppose a firm shuts down in the short run. Which of the following statements can you infer from the…
A: Shut down means the company closes all its operations because it cannot gain any benefit from it.
Q: Why should a firm shut down if its average variable cost curve is above the price of their product?
A: If the price of the product is below the average variable cost (AVC), then the firm will shutdown.…
Q: If a retail clothing shop has to pay monthly rental of A$10,000 and has variable costs of A$20,000…
A: A firm faces different shut down constraint in different time periods such that in short-run or in…
Q: “Even if a firm is losing money, it may be better to stay in business in the short run.” Is this…
A: Yes, in the short run, it may be better to run the firm even if it is losing money.
Q: A firm should shut down in the short run if it is not covering its
A: To find : When should firm shut down.
Q: As quantity increases, a firm's average fixed costs will always....
A: average fixed cost (AFC) is defined as the fixed costs of production (FC) divided by the quantity…
Q: Under a PCM, the long run equilibrium situation is that, Economic profit is equal to zero. Is this…
A: Under perfect competition market,Firms are price taker.Therefore whatever price is set by…
Q: A firm sells 1,000 units per week. Suppose the average variable cost is $40, and the average cost is…
A: In the short run, the firm has both fixed cost and variable cost. In the long run there is no fixed…
Q: shut down in the short run if Question 3 options: P < AVC TR < TC P = MC P < ATC TR=
A: In a competitive market there are large number of firms producing similar and identical products…
Q: Suppose that, at a quantity of q = 20, a firm's costs are as follows: MC = 20, AVC = 12, ATC = 30.…
A: In economics AVC is basically determined as the total firms variable costs which is merely divided…
Q: Jeannette has a wheat farm, and the wheat market is perfectly competitive. The market price of a…
A: Total Cost is the sum of variable and fixed cost. TC= VC+FC Average variable cost is the per unit of…
Q: Why would a firm that incurs losses choose to produce rather than shut down
A: Shut down point refers to the point where the firm stops its production process. It is the point…
Q: In the short run, each firm experiences a loss of $
A: We know , Profit = TR - TC TR = Price * Quantity TR = 100 *50 TR = 5000 ATC = TCQ TC = ATC * Q TC…
Q: If the price at which Jeannette can sell wheat is $16/bu., will Jeannette earn a profit in the short…
A: The perfectly competitive market produces homogeneous products. There are numerous firms in the…
Q: Jeannette has a wheat farm, and the wheat market is perfectly competitive. The market price of a…
A: Divide the fixed costs of production by the price per unit minus the variable costs of production to…
Q: Explain in your own words why in the short run a firm may continue to produce even at a loss…
A: A firm in the short will continue to produce until price covers it variable cost. Otherwise the firm…
Q: For the following, decide whether you agree or dis-agree and explain your answer: a. A firm earning…
A: A perfect competition is the form of market that consist of large number of buyers and sellers,…
Q: Complete table b. Calculate the total fixed cost for the firm c. Is the firm operating in the…
A: The solution is given below
Q: Your company sells Beyonce concert DVDS. Total fixed costs for your operation are $10,000 a year.…
A: Shut down When a corporation chooses to shut down, it means that production will be put on hold for…
Q: Under what conditions will a firm shut down temporarily? Explain theoretically and graphically.
A: Firm would shut down temporarily,if it is not able to cover the fixed cost. For this,price has to be…
Q: Under what conditions would a firm decide to shut down in the short run but remain invested in the…
A: In a market, a firm faces different situations in short-run and long-run due to which it makes…
Q: ohnson produces bottles. Suppose q is the quantity of bottles produced. Her Total Costs are given by…
A: Average cost = total cost/ q take first order and second order condition for minimum value of…
Q: What is the farmer's economic profit? The peach farmer earns economic profit of S (Enter your…
A: Solution: Given Data: cost of land purchased = $1,000,000 Rent on equipment = $100,000 Wages paid =…
Q: How we can understand the Long-run Normal price in increasing cost industry, and the Long-run Normal…
A: When a business expands, its average expenses rise. This is known as an increasing-cost industry…
Q: Given the operations of a peanut firm under perfect competition and assuming that the price of…
A: Under perfect competition, individual firms have no control over price. Therefore, the firm’s…
Q: Consider a firm that has no fixed costs and that is currently losing money. Are there any situations…
A: If a firm has no fixed cost, the total cost of a firm is equal to the total variable cost, and…
Q: In the short run, if a firm is having economic losses, but the profit is greater than the average…
A: The following problem has been solved as follows:
Q: At what output rate does the firm maximize profit or minimize loss?
A: After marginal revenue exceeds marginal cost,at that output rate firms maximize profit.
Q: As of 2019, the US department of agriculture (USDA) did not have detailed guidelines for egg farmers…
A: The fixed cost of production refers to the aggregate of costs that are incurred on the procurement…
Q: What of the following is considered "sunk cost" in the short run? Variable cost. (VC, or TVC)…
A: Definition: Sunk Costs: In economics and firm decision-making, a sunk cost is a cost that has…
Q: s a prospective production manager of an agribusiness firm whose average variable cost of production…
A: The average variable cost is the cost per unit of total variable cost. AVC=TVCQ
Q: The graph shown below is that of Do Drop In, a shop in the dry-cleaning industry. a) At the…
A: A monopoly is a sole producer of a good thus having maximum market power and will act as a price…
Q: A profit-maximizing firm decides to shut-down production in the short-run. Its total fixed cost of…
A: Although shutting down can lower variable expenses to zero, the firm has already committed to pay…
Q: Does a competitive firm’s price equal the minimumof its average total cost in the short run, in the…
A: A perfect competition(PC) market is one with many consumers and sellers producing identical…
Q: What is the term for the rising portion of its marginal cost curve above its average variable cost…
A: Hello. Since your question has multiple sub-parts, we will solve the first three sub-parts for you.…
Q: 'In the short run, the firm should shut down only if the price is less than average variable cost''…
A: This statement is absolutely correct.
Q: A firm sells 1,000 units per week. Suppose the average variable cost is $15, and the average cost is…
A: A break-even point is a point at which a firm's economic profit is zero. Economic profit is revenue…
Q: Bob's lawn mowing service is a profit maximizing, competitive firm. Bob mows lawns for $27 each. His…
A: Both accounting profit and economic profit include fixed cost in the short run. Accounting profit =…
Q: An industry in which the long-run ATC continues to decline as firm size increases will likely become…
A: There exist different types of monopoly market structures. The common feature of the monopoly market…
Q: If a firm’s current revenues are less than its current variable costs, when should it shut down? If…
A: The firms have several things to look after, including the total costs, fixed costs, variable costs,…
Q: Should a firm shut firm if its revenue is R = $1,500 per week and: a. Its variable cost is VC =…
A: There are two types of cost in short run which are fixed and variable cost. The total variable cost…
Q: In the diagram above, when the firm's Output (Q) is 20, Average Variable Cost (AVC) is: $17.50 $7.50…
A: Average variable cost refers to the per-unit total variable cost i.e. AVC = TC/Q
Q: Why is it reasonable to think of normal profit as a type of cost to the firm?
A: In the short run, firms usually try to temporarily shut down their operations when the prices are…
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- If a firm’s current revenues are less than its current variable costs, when should it shut down? If the firm decides to shut down, should we expect that decision to be final? Explain using an example that is not in the book.What will be the firms total profit?A company produces very unusual CD's for which the variable cost is $ 15 per CD and the fixed costs are $ 50000. They will sell the CD's for $ 79 each. Let a be the number of CD's produced. Write the total cost C as a function of the number of CD's produced. C =$ Write the total revenue R as a function of the number of CD's produced. R=$ Write the total profit P as a function of the number of CD's produced. P=$ Find the number of CD's which must be produced to break even. The number of CD's which must be produced to break even is Question Help: Video Submit Question
- The table gives some of the costs of the Delicious Pie Company. The marginal cost per pie of increasing the output of pies from 100 to 200 is Total variable cost (dollars) Output (pies) 0 100 200 300 400 $8.00 $600 $6.00 $5.00 0 400 1,000 1,800 2,800 Total cost (dollars) 300 700 1300 2100 3100 ?The following are the cost information of a typical ice tea company in an industry with 100 firms. Output (ice tea per hour) Marginal Cost ($ per ice tea) Average Variable Cost ($ per ice tea) Average Total Cost ($ per ice tea) 3 2.50 4.00 7.33 4 2.20 3.53 6.03 5 1.90 3.24 5.24 6 2.00 3.00 4.67 7 2.91 2.91 4.34 8 4.25 3.00 4.25 9 8.00 3.33 4.44 a) At the price of $2.20 per ice tea, what is the firm’s profit maximizing level of output? Why is this the profit maximizing level of output for the firm? b) If the market price is $8 per ice tea and the firm is producing six (6) ice tea per hour, is the firm maximizing profit or not? Why or why not? If the firm is not maximizing profit, what should it do to maximize profit? c) At the price of $8 per ice tea, what is the firm’s profit-maximizing level of output? Why is this the profit maximizing level of output? What is the firm’s economic profit at…The following are the cost information of a typical ice tea company in an industry with 100 firms. Output (ice tea per hour) Marginal Cost ($ per ice tea) Average Variable Cost ($ per ice tea) Average Total Cost ($ per ice tea) 3 2.50 4.00 7.33 4 2.20 3.53 6.03 5 1.90 3.24 5.24 6 2.00 3.00 4.67 7 2.91 2.91 4.34 8 4.25 3.00 4.25 9 8.00 3.33 4.44 d) Is the price $8 a short-run or long-run equilibrium price for the industry? If the price is not a long run equilibrium price, what adjustments are likely to happen in the market for it to reach long run equilibrium. e) What price must prevail in the market for a typical firm to operate in the short run? At this price, how many ice tea will be supplied by all firms in the market?
- “Even if a firm is losing money, it may be better to stay in business in the short run.” Is this statement ever true? Under what condition(s)?10 ATC ATC2 ATC3 ATC, 2 2 4 6 8 10 Quantity (thousands of copies per day) A copy shop is choosing between four different operational sizes (ie, plant size). The average total cost curve for each option is shown in the graph. If the market demand for copies is 12,000 copies per day, how many copy shops would you expect to see in this market? The answer depends on the price of a copy, which is unknown. O 1 (because the copy shop will become a monopoly with a large quantity demanded) O (because the copy shop can't produce 12,000 copies efficiently and will shutdown) 3 (with each shop supplying 4000 copies per day) 8, 6 Average cost (cents per copy)If a firm's fixed cost decreases. The firm's should take advantage of this drop by producing more True False
- Question #1: Perfect Competition Kevins Kayak Company produces kayaks. Assume that the kayak industry is perfectly competitive. The firm has a total cost function of TC(Q) = 240,10 12875 4 Q+. Kevin can sell all the kayaks he produces for $1,200 each.(a) How many kayaks should Kevin produce (i.e., find Q)? (b) Calculate the ATC if Kevin produced at the output level you found in Part (a)? (b) How much profit would Kevin make at the output level found in Part (a)? (c) Should Kevin stay in business? You must justify your answer using the shut-downrule (relating price and average variable cost)!Under what conditions will a firm shut down temporarily? Explain.Are there fixed costs in the long-run? Explain briefly.