Your average total cost is $30; the price you receive for the good is $15. Should you keep on producing the good? Why? You should produce in the long run as long as you are only earning small economic losses. It is always possible to make up a small loss. Maybe. It depends on whether you are covering average variable costs in the long run. You should not produce in the long run because you are earning an economic loss. All inputs are variable in the long run so you can go out of business. You should continue producing in the long run because you are earning an economic profit.

Q: Consider a production process where flowers are grown (the output) using gardeners (labor) and…

A: Total cost refers to the overall expense incurred by a firm in producing a specific level of output…

Q: Production and costs are the primary building components on the supply side of the market. From the…

A: Two crucial measures for assessing a company's financial performance are accounting profit and…

Q: ell us your strategy to maximize output given limited labor and capital constraints? What are the…

A: To maximize output, businesses can employ a variety of strategies depending on their industry,…

Q: Which of the following statements do you think reflect sound economic thinking? Explain your answer.…

A: Economic thinking is a way of analyzing economic phenomena. It is a process of examining the choices…

Q: What causes costs of production to vary with output in the short run? What generally causes costs…

A: The long run refers to a time frame where all factors of production and costs will be variable, and…

Q: X and Y are both factors of production. X's marginal product is 30 and Y's is 20. X is $5 each and Y…

A: A profit maximizing firm recruit the resource at the point where the marginal product of resource…

Q: A firm is jointly owned by Juan and Roda. The firm’s production function requires two inputs: effort…

A: Given , Cost of effort for Juan = Cost of effort for Roda = 2Price of output = 2 Production function…

Q: The Principle of Diminishing Marginal Returns means what?         the more a good is consumed, the…

A: Diminishing Marginal Returns states as additional units of a variable input are added to a fixed…

Q: 1. Given the following cost and production functions, find where production is optimized. C = 25x₁ +…

A: For given level of output Q, a firm can minimize its cost by appropriate use of its factor of…

Q: A firm can produce output using three inputs and the following production 111 technology: q=x¹x¹x.…

A: A price-taking firm is one that cannot decide the price on its own. It takes the price as given.…

Q: Consider a production process where flowers are grown (the output) using gardeners (labor) and…

A: Total cost is the sum of fixed cost and variable cost.Fixed cost is the cost that doesn't changes…

Q: Explain Theory of production, and Theory of cost. Analyze the business, using at least a…

A: Theory of production: It is a theory which explains how a business decides how much of a good to…

Q: Your Econ. Professor bought airline tickets to leave a conference early on Saturday morning. He…

A: He brought the airline ticket to leave a conference early on Saturday morning. But when he found…

Q: A firm uses capital and labor to produce output according to the pproduction function q = 4pKL, for…

A: Since we only answer up to 3 sub-parts, we’ll answer the first 3. Please resubmit the question and…

Q: How does learning by doing affect average total costs? Short-run average total costs will rise…

A: "Learning by doing" is a concept that highlights the idea that individuals or organizations can…

Q: Suppose that a production function of a firm is given by q = f(1) = 2√1. It depends only on labor,…

A: For a price taker firm, prices on which it sells its output and the price on which it buys the…

Q: "Let's see how this applies to your study time. If you have three hours per night to study, you can…

A: Background Overview: "Now, let's consider how this concept pertains to your study schedule. With a…

Q: s this an example of opportunity cost? “To begin, I began selling prints of my pictures in 2019…

A: The cost or value of the next alternative which is best being given up is known as the cost of…

Q: As a manufacturer of hats, you are producing 10 hats using 16 capital and 7 labour. The price of…

A: Production is a process in which inputs are transformed into final goods and services. The major…

Q: . Apple uses labour and machines to produce iPhones according to the production function y = LM,…

A: ***Since the student has posted a question with multiple subparts, the expert is required to solve…

Q: a. Under autarky (in absence of trade), a unit cost of labor (w) is $40 and a unit cost of capital…

A: The combination of factor-inputs that a firm uses to produce output is determined by the amount of…

Q: Microeconomics divides costs in to “short-run costs” and “long-run costs”. Can “long-run” differ…

A: The short run is defined as the time frame during which wages and prices of other production inputs…

Q: Douglas Fur is a small manufacturer of fake-fur boots in San Francisco. The following table shows…

A: Total cost (TC) at zero level of out is the total fixed at cost at each level of output. Thus, fixed…

Q: If a firm chooses to produce output in the short run, how much output will it produce. Explain why…

A: The objective of the question is to understand the quantity of output a firm will produce in the…

Short-Run Costs and Long-Run Costs

Cost of short-run and the long-run is an economic term that describes the cost involved in the production of goods in a firm in the short as well as long period.