What is the lowest price a dozen eggs couldreach before Farmer Johnson would beforced to shut down in the short run? (Pleaseenter your answer without a dollar sign, forvalues less than 1.00, you must put a 0before the decimal) Farmer Johnson producers Eggs in aperfectly competitive egg market. The shortrun cost curves are displayed below.$4.00MC$3.50ATCAVC$3.00$2.50$2.00$1.50$1.00$0.50$020406080100120140160Dozens of EggsPrice of Eggs

Shutting down of firms in the short run is determined by the shutdown rule.

What is the lowest price a dozen eggs could reach before Farmer Johnson would be forced to shut down in the short run? (Please enter your answer without a dollar sign, for values less than 1.00, you must put a 0 before the decimal)

What is the lowest price a dozen eggs could reach before Farmer Johnson would be forced to shut down in the short run? (Please enter your answer without a dollar sign, for values less than 1.00, you must put a 0 before the decimal)

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Question

What is the lowest price a dozen eggs could
reach before Farmer Johnson would be
forced to shut down in the short run? (Please
enter your answer without a dollar sign, for
values less than 1.00, you must put a 0
before the decimal)

Farmer Johnson producers Eggs in a
perfectly competitive egg market. The short
run cost curves are displayed below.
$4.00
MC
$3.50
ATC
AVC
$3.00
$2.50
$2.00
$1.50
$1.00
$0.50
$0
20
40
60
80
100
120
140
160
Dozens of Eggs
Price of Eggs

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100 90 90 00 80 COSTS (Dollars) 70 70 00 60 50 40 30 20 10 ATC AVC MC 0 0 5 10 15 20 25 30 QUANTITY (Thousands of snapbacks) 35 35 40 45 50 For every price level given in the following table, use the graph to determine the profit-maximizing quantity of snapbacks for the firm. Further, select whether the firm will choose to produce, shut down, or be indifferent between the two in the short run. (Assume that when price exactly equals average variable cost, the firm is indifferent between producing zero snapbacks and the profit-maximizing quantity of snapbacks.) Lastly, determine whether the firm will earn a profit, incur a loss, or break even at each price. Price (Dollars per snapback) 10 20 32 40 50 60 Quantity (Snapbacks) Produce or Shut Down? Profit or Loss?
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