The figure to the right represents the cost structure for a perfectly competitive firm with its wverage total cost (ATC) curve, average variable (AVC) curve, and marginal cost (MC) curve. Fixed costs are $50.00 Suppose the market price is $21.00 per unit. Characterize the firm's profit at the firm produces output, then it will Should the firm instead shut down in the short run? In the short run, the firm should Price and c 30.00 28.00 26.00 24.00 22.00 20.00 18.00 16.00 14.00 12.00- 10.00 8.00- g MC ATC
The figure to the right represents the cost structure for a perfectly competitive firm with its wverage total cost (ATC) curve, average variable (AVC) curve, and marginal cost (MC) curve. Fixed costs are $50.00 Suppose the market price is $21.00 per unit. Characterize the firm's profit at the firm produces output, then it will Should the firm instead shut down in the short run? In the short run, the firm should Price and c 30.00 28.00 26.00 24.00 22.00 20.00 18.00 16.00 14.00 12.00- 10.00 8.00- g MC ATC
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Transcribed Image Text:The figure to the right represents the cost structure for a perfectly competitive firm with its
average total cost (ATC) curve, average variable (AVC) curve, and marginal cost (MC) curve.
Fixed costs are $50.00
Suppose the market price is $21.00 per unit
Characterize the firm's profit
If the firm produces output, then it will
Should the firm instead shut down in the short run?
In the short run, the firm should
Price and c
30.00
28.00-
26.00
24.00
22.00
20.00-
18.00
16.00
14.00-
12.00-
10.00-
8.00-
MC ATC
TIT
AVC G
Transcribed Image Text:If the firm produces output, then it will
Should the firm instead shut down in the short run?
In the short run, the firm should
A. shut down because price is greater than average variable cost.
B. continue to produce because price is greater than average fixed cost.
OC. shut down because price is less than fixed costs.
OD. shut down because price is less than average total cost.
OE. continue to produce because price is greater than average variable cost.
Price and cost
2000-
18.00
16.00
14.00
12.00
10.00
00-
6.00
4.00-
200
0.004
0
Quantity
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