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What is the​ firm's shutdown​ point?   A firm will stop producing an output in the short run when the market price of the good is​ _________.     A. equals MC   B. below minimum AVC   C. below minimum ATC   D. equals ATC   This​ firm's shutdown point is at a market price of ​$ ?  per unit and its​ profit-maximizing output is ? units

What is the​ firm's shutdown​ point?   A firm will stop producing an output in the short run when the market price of the good is​ _________.     A. equals MC   B. below minimum AVC   C. below minimum ATC   D. equals ATC   This​ firm's shutdown point is at a market price of ​$ ?  per unit and its​ profit-maximizing output is ? units

ENGR.ECONOMIC ANALYSIS
ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN:9780190931919
Author:NEWNAN
Publisher:NEWNAN
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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What is the​ firm's shutdown​ point?
 
A firm will stop producing an output in the short run when the market price of the good is​ _________.
 
 
A.
equals MC
 
B.
below minimum AVC
 
C.
below minimum ATC
 
D.
equals ATC
 
This​ firm's shutdown point is at a market price of
​$ ? 
per unit and its​ profit-maximizing output is
?
units.
The provided table offers insights into a market demand schedule (top two rows) and a firm's cost schedules—average and marginal (bottom four rows). ### Market Demand Schedule: - **Price (P $):** 24, 20, 16, 12, 8, 4 - **Quantity:** 3,000, 4,000, 5,000, 6,000, 7,000, 8,000 ### Firm's Cost Schedules: - **Firm's output in units:** 1, 2, 3, 4, 5, 6 - **Marginal Cost (MC $):** 11.00, 11.13, 12.00, 13.63, 16.00, 19.13 - **Average Total Cost (ATC $):** 13.50, 12.25, 12.00, 12.19, 12.70, 13.50 - **Average Variable Cost (AVC $):** 11.25, 11.13, 11.25, 11.63, 12.25, 13.13 ### Question 1: What is the firm's shutdown point? A firm will stop producing an output in the short run when the market price of the good is: - **Option A:** equals MC - **Option B:** below minimum AVC - **Option C:** below minimum ATC (Correct Answer) - **Option D:** equals ATC ### Explanation: The firm's shutdown point in the short run occurs at a market price equal to the minimum point of the AVC curve. Based on the provided data, the firm's shutdown point is at a market price where costs can no longer be covered, forcing it to cease production to minimize losses. **This firm's shutdown point is at a market price of $__11.25__ per unit, and its profit-maximizing output is __3__ units.** ### Analysis: The table helps analyze the decision-making process firms undergo regarding production levels based on pricing and cost considerations. Understanding this can aid in determining optimal production strategies under various market conditions.
Transcribed Image Text:The provided table offers insights into a market demand schedule (top two rows) and a firm's cost schedules—average and marginal (bottom four rows). ### Market Demand Schedule: - **Price (P $):** 24, 20, 16, 12, 8, 4 - **Quantity:** 3,000, 4,000, 5,000, 6,000, 7,000, 8,000 ### Firm's Cost Schedules: - **Firm's output in units:** 1, 2, 3, 4, 5, 6 - **Marginal Cost (MC $):** 11.00, 11.13, 12.00, 13.63, 16.00, 19.13 - **Average Total Cost (ATC $):** 13.50, 12.25, 12.00, 12.19, 12.70, 13.50 - **Average Variable Cost (AVC $):** 11.25, 11.13, 11.25, 11.63, 12.25, 13.13 ### Question 1: What is the firm's shutdown point? A firm will stop producing an output in the short run when the market price of the good is: - **Option A:** equals MC - **Option B:** below minimum AVC - **Option C:** below minimum ATC (Correct Answer) - **Option D:** equals ATC ### Explanation: The firm's shutdown point in the short run occurs at a market price equal to the minimum point of the AVC curve. Based on the provided data, the firm's shutdown point is at a market price where costs can no longer be covered, forcing it to cease production to minimize losses. **This firm's shutdown point is at a market price of $__11.25__ per unit, and its profit-maximizing output is __3__ units.** ### Analysis: The table helps analyze the decision-making process firms undergo regarding production levels based on pricing and cost considerations. Understanding this can aid in determining optimal production strategies under various market conditions.
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