Homework Answers
In the short run, a firm must consider the relationship between price and average variable cost when deciding whether to operate or shut down. If in the short run, at the profit maximizing output level, price < AVC, which means total revenue < total variable cost, then the firm will shut down in the short run because it won't be able to cover at least it's variable cost. If price > AVC, the firm will continue to operate in the short run and if price = AVC, the firm will be indifferent between production and shutting down in the short run.
Answer: Average variable cost
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when deciding In the short run, a firm must consider the relationship between price and whether...
when deciding In the short run, a firm must consider the relationship between price and whether...
when deciding In the short run, a firm must consider the relationship between price and whether to operate or shut down. average variable cost O total cost O average fixed cost O unavoidable cost
Fixed costs are irrelevant in the decision about whether to shut down production in the short...
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....
For the first drop down "Based on what you know of the relationship between short-run and...
For the first drop down "Based on what you know of the
relationship between short-run and long-run costs, the firm's long
run average cost curve will look most like (LRAC1 /OR/ LRAC2) on
the graph below"
For the last part Short Run / Long Run
Economic Profit Positive / negative OR zero
Action Produce Exit OR Shutdown
Thank you!!
1. Shut down versus exit prices in the short and long run Aa Aa The graph below represents the marginal cost...
.17 instead of $17 baikopie 2sdnt slodw Consider an electric utility deciding whether to continue to...
.17 instead of $17
baikopie 2sdnt slodw Consider an electric utility deciding whether to continue to operate a coal plant to produce electricity or shut it down temporarily. In the short run, the electric utility can decide how much labor to hire to operate the coal plant, but cannot increase the size of the plant nor sell it nor shut it down permanently. Average cost - the average of capital, labor, and fuel (coal) costs - is $17 per kWh....
4. Deriving the short-run supply curve Consider the perfectly competitive market for dress shirts. The following graph...
4. Deriving the short-run supply curve Consider the perfectly competitive market for dress shirts. The following graph shows the marginal cost (MC), average total cost (ATC), and average variable cost (AVC) curves for a typical firm in the industry. that when the price is exactly equal to the average variable cost, the firm is indifferent between producing zero shirts and the profit-maximizing quantity. Also, indicate whether the firm will produce, shut down, or be indifferent between the two in the short run....
8. In the short run, a perfectly competitive firm will shut down if it is producing...
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...
Industry Firm SP MC ATC X -P=MR AVC 35.61. .. 10,000 10 16 18 Answer the following question based off of the graphs abo...
Industry Firm SP MC ATC X -P=MR AVC 35.61. .. 10,000 10 16 18 Answer the following question based off of the graphs above, which depict a perfectly competitive industry and firm. Assume that fixed costs (FC) for the firm are $400: Does the firm continue to operate given the information presented in the graph? When would a firm shut down? The firm continues to operate in the short run; A firm would shut down in the short run if...
Which of the following is not a valid generalization concerning the relationship between price and costs...
Which of the following is not a valid generalization concerning the relationship between price and costs for a purely competitive seller in the short run? 23 Multiple Choice еВook Price must be at least equal to average total cost. Price times quantity produced must be equal to or greater than total variable cost for some level of output or the firm will close down in the short run. Price may be equal to, greater than, or less than average total...
Econ 250 Chapter 8 Homework Name 1. (2.5 points) The following table shows a short-run production...
Econ 250 Chapter 8 Homework Name 1. (2.5 points) The following table shows a short-run production function for laptop computers. Fll Chapter 8 Homework in the last column and then answer the question that follows Number of Workers Total Output of Laptop Computers Marginal Product of each 0 Worker 0 N/A 80 200 300 4 360 5 400 With what worker does diminishing marginal product set in? (3 points) A pizza business has the following cost structure. Use the given...
I need help with parts C and F ONLY. c.) In the long run, a firm...
I need help with parts C and F ONLY.
c.) In the long run, a firm operating in a perfectly competitive market will earn zero accounting profit, but can still earn positive economic profit d.) In the short run, a firm should exit the industry if its marginal costs exceeds its marginal revenue e.) In the long run, some firms will exit the market if price is below average total cost. f.) A perfectly competitive firm will consider fixed costs...
when deciding In the short run, a firm must consider the relationship between price and whether to operate or shut down. average variable cost O total cost O average fixed cost O unavoidable cost
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....
For the first drop down "Based on what you know of the
relationship between short-run and long-run costs, the firm's long
run average cost curve will look most like (LRAC1 /OR/ LRAC2) on
the graph below"
For the last part Short Run / Long Run
Economic Profit Positive / negative OR zero
Action Produce Exit OR Shutdown
Thank you!!
1. Shut down versus exit prices in the short and long run Aa Aa The graph below represents the marginal cost...
.17 instead of $17
baikopie 2sdnt slodw Consider an electric utility deciding whether to continue to operate a coal plant to produce electricity or shut it down temporarily. In the short run, the electric utility can decide how much labor to hire to operate the coal plant, but cannot increase the size of the plant nor sell it nor shut it down permanently. Average cost - the average of capital, labor, and fuel (coal) costs - is $17 per kWh....
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...
Industry Firm SP MC ATC X -P=MR AVC 35.61. .. 10,000 10 16 18 Answer the following question based off of the graphs above, which depict a perfectly competitive industry and firm. Assume that fixed costs (FC) for the firm are $400: Does the firm continue to operate given the information presented in the graph? When would a firm shut down? The firm continues to operate in the short run; A firm would shut down in the short run if...
Which of the following is not a valid generalization concerning the relationship between price and costs for a purely competitive seller in the short run? 23 Multiple Choice еВook Price must be at least equal to average total cost. Price times quantity produced must be equal to or greater than total variable cost for some level of output or the firm will close down in the short run. Price may be equal to, greater than, or less than average total...
Econ 250 Chapter 8 Homework Name 1. (2.5 points) The following table shows a short-run production function for laptop computers. Fll Chapter 8 Homework in the last column and then answer the question that follows Number of Workers Total Output of Laptop Computers Marginal Product of each 0 Worker 0 N/A 80 200 300 4 360 5 400 With what worker does diminishing marginal product set in? (3 points) A pizza business has the following cost structure. Use the given...
I need help with parts C and F ONLY.
c.) In the long run, a firm operating in a perfectly competitive market will earn zero accounting profit, but can still earn positive economic profit d.) In the short run, a firm should exit the industry if its marginal costs exceeds its marginal revenue e.) In the long run, some firms will exit the market if price is below average total cost. f.) A perfectly competitive firm will consider fixed costs...
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