Output (tons of rice per year) 0 Total cost (dollars per ton) $1,000 $1,200 2 3 4 5 Based on the table above which shows Chip's costs, if rice sells for $800 a ton, Chip $1,600 $2,200 $3,000 $4,000 OA. earns an economic profit and should stay open in the short run. B. incurs an economic loss and should shut down in the short run. OC. earns an economic profit, but should shut down in the short run. OD. incurs an economic loss, but should stay open in the short run.

Output (tons of rice per year) 0 Total cost (dollars per ton) $1,000 $1,200 2 3 4 5 Based on the table above which shows Chip's costs, if rice sells for $800 a ton, Chip $1,600 $2,200 $3,000 $4,000 OA. earns an economic profit and should stay open in the short run. B. incurs an economic loss and should shut down in the short run. OC. earns an economic profit, but should shut down in the short run. OD. incurs an economic loss, but should stay open in the short run.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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8. Consider a firm's short run and long run average costs depicted below: 300 270 240 210 180+ Wunt 150 120+ 90 60 30 ---- W X AC LRAC 200 400 600 800 1000 1200 1400 1600 1800 2000 # of units Suppose this firm has been producing 400 units per month for a long time. If it decides to increase its output to 800 units per month, then its average cost will O A. fall from $300/unit to $150/unit initially, then rise to $240/unit eventually. O B. fall from $300/unit to $60/unit initially, then rise to $240/unit eventually. O C. fall from $300/unit to $60/unit and remain there. O D. fall from $300/unit to $240/unit and remain there. O E. rise from $150/unit to $240/unit initially, then fall to $60/unit eventually. OF. rise from $150/unit to $300/unit initially, then fall to $60/unit eventually. O G. fall from $150/unit to $60/unit and remain there. OH. rise from $150/unit to $240/unit and remain there.
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Dollars P P₂ P₁ 0 ******** MC Q₁ Q₂ Q3 Q4 Q5 Quantity ATC AVC -MR₁ -MR₂ -MR₁ Refer to the above diagram. All data are for the short run. Which of the following sta correct? O The firm will produce an output of Q1 when price is P1. The firm will earn positive economic profits when price is at P2. O Average fixed cost is P3 - P1 at output Q1. O At price P1, the firm will close down.
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