Principles of Economics (12th Edition)
12th Edition
ISBN: 9780134078779
Author: Karl E. Case, Ray C. Fair, Sharon E. Oster
Publisher: PEARSON
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Chapter 7, Problem 1.7P
To determine
Identify short run and long run decisions.
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The graph shown below is that of Do Drop In, a shop in the dry-cleaning industry.
a) At the optimal output, what price will Do Drop In charge and what will be its output?
Price: $
Output: units
b) At the optimal price and output, what will be its total revenue, total cost, and total loss?
TR: $ ; TC: $
Total loss: $
c) If this firm made a rational decision to continue to produce, despite the loss, average variable cost must be below what level?
AVC must be less than $ .
At a university faculty meeting in 2012, a proposal was made to increase the housing benefits for new faculty to keep pace with the high cost of housing. What will likely be the long-run effect of this proposal?
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