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11.7. A monopolist operates with the following data on cost and demand. It has a total fixed cost of $1,400 and a total varia
P= $120 - 20. The size of its sunk cost is $600. The firm expects the conditions of demand and cost to continue in the forese
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Answer #1

P, (до - aQ а) Тр, P@ 12 оф - а Mpid (TP) ada do do (100Q - 120-ug ә) Head (ovc) = q cas = 20 dQ моя ртон ис: Не 190 — ч@ : 2

b) AVC = VC/ Q = Q​​​​​​2/Q = Q = $20

because the average variable cost is less than that of price it can be mentioned that in the short run the firm need not shutdown because it is able recover its variable costs and a portion of fixed cost

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