Explain how the perfectly competitive firm decides whether to operate or shut down in the short run.
For a perfectly competitive firms if the total revenue of the firms i.e. the product of its price and quantity is more than the average variable cost and less than average total cost then the firm is facing a loss in the market and they can continue to the long run for deciding to shut down or continue
But if the total revenue of the firm is less than the average variable cost then they will be losing the very cost of production in the market and hence they will stop production i.e. shutdown.
Explain how the perfectly competitive firm decides whether to operate or shut down in the short...
8. In the short run, a perfectly competitive firm will shut down if it is producing a level of output where marginal revenue is equal to short-run marginal cost and price is A. Greater than average total cost. B. Less than average total cost. C. Greater than average variable cost. D. Less than average variable cost E. None of the above 10. Given your answer to Question 8, what can you say about Hanna's firm: A. It should continue operating...
To minimize losses in the short run, a perfectly competitive firm should shut down if… a. total revenue is less than total cost (TR < TC). b. total revenue is less than total fixed cost (TR < TFC). c. total revenue is less than the difference between total fixed cost and total variable cost (TR < TFC - TVC). d. total revenue is less than total variable cost (TR < TVC).
Fixed costs are irrelevant in the decision about whether to shut down production in the short run because fixed costs: do not affect, and are not affected by, the quantity the firm produces. can be paid off over time. only change when production changes only change in the short run |If a profit-maximizing perfectly competitive firm shuts down in the short run, it incurs no losses. it incurs an economic loss equal to total fixed cost. its profit equals zero....
In the short run, a perfectly competitive firm might earn negative economic profits and then decide to shut down. On a graph, show this situation, using marginal revenue, marginal cost, average-total-cost, and average-variable-cost curves. Indicate the level of output at which the firm will no longer produce. Explain why your graph shows the shut down point.
In the short run, a perfectly competitive firm is producing where MR-MC. At this output, P>AVC and P>ATC. This firm A) is making positive economic profits B) is making zero economic profits C) is making negative economic profits but should continue to operate D) is making negative economic profits and should shut down.
If a perfectly competitive firm faces a lower wage rate in the short run, what will happen? The firm’s short run maximum loss will fall The firm’s supply curve will shift up The firm’s shut down price will fall All of the answers are correct
2. Each of the following situations could exist for a perfectly competitive firm in the short run. In each case, explain whether the firm should produce in the short run, shut down in the short run, or whether additional information is needed to determine what it should do. a. Total costs exceed total revenue at all output levels. (4 pts) b. Marginal revenue exceeds marginal cost at the current output level. (4 pts) C. Price exceeds average total cost at...
2. Under what conditions should a competitive firm shut down in the short run? Also show it in a graph.
Introduction to Microeconomics Deriving the Short-Run Supply Curve for the Perfectly Competitive Firm Cost $ 0 10 20 30 40 50 60 70 80 90 100 110 Outputs tunits) The figure illustrates the costs faced by a perfectly competitive firm. Use the figure to answer the following: 1) Based on the above, indicate on the graph, the short-run market supply curve for the perfectly competitive firm. 2) At what price will the firm shut-down? Will the firm leave the industry?...
cardboard boxes are produced in a perfectly
competitive market. each identical firm has a short run total cost
curve of TC= 3Q^3 - 12Q^2 +16Q + 100, where Q is measured in
thousands of boxes per week. calculate the output for the price
below which a firm in the market will not produce any output in the
short run. ( i.e., the output for the shut down price)
a 2^1/2
b. 2
c. 1/2
d. 1/square root of 2
2)...