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Shutdown Price We have the following information for a competitive fim: Quantity Vaiable Cost Fixed Cost 14 18 21 25 10 10 10 10 Part A: What is the marginal cost at each quantity supplied? (The variable cost in the table above is the total variable cost. The marginal cost is the difference in total variable cost between N and N-1 units. Note that the marginal cost curve is U-shaped: It is high at Q 1 andQ 8, and it is low at Q 4.) Part B: What is the competitive firms short-run shutdown price? (For a competitive firm, the shutdown price is the minimum average variable cost. Complete the table below, and find the price at the minimum average variable cost. The average variable cost has a minimum because the marginal cost curve is U-shaped.) Quantity Variable Cost Fixed Cost Average Variable Cost 14 18 21 25 10 10 10 Part C: What is the firms total profit at this short-run shutdown price? (Atthe shutdown price, the total revenue collected just covers the total variable costs of production. The fims profit is negative at this price.)

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9 2. 18 21 25 3 G. 25 5Men. S.S 4-2 l0 6.5 PART A - MC 幻 TVC E TR-Te 2S-35-10 CLo

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