Mink farming is a perfectly competitive industry and all mink farms have the same cost curves. When the market price is $38 a mink, farms maximize profit by producing 400 mink a week. At this output, average total cost is $36 and average variable cost is $22 a mink. Minimum average variable cost is $17 a mink. If the price of a mink falls to $17, the mink farmer will A.produce the profit-maximizing output B. shut down C.continue to produce 400 mink a week D.attempt to raise the price back to $38 a mink E.either shut down or produce the profit-maximizing output

Mink farming is a perfectly competitive industry and all mink farms have the same cost curves. When the market price is $38 a mink, farms maximize profit by producing 400 mink a week. At this output, average total cost is $36 and average variable cost is $22 a mink. Minimum average variable cost is $17 a mink. If the price of a mink falls to $17, the mink farmer will A.produce the profit-maximizing output B. shut down C.continue to produce 400 mink a week D.attempt to raise the price back to $38 a mink E.either shut down or produce the profit-maximizing output

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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