1. Suppose Janet Sells papayas at a perfectly competitive market in Thailand. While her average total...
1. Suppose Janet Sells papayas at a perfectly competitive market in Thailand. While her average total cost (ATC) reaches a minimum level of $3, her minimum average variable cost (AVC) is $2.
a. At what price will Janet reach the equilibrium point? Will Janet sell any papayas at that point?
b. Under what circumstances will Janet's shop shut down.
Homework Answers
Ans-1)
According to question Janet will sell (Qe) quantity on P* price given on diagram. Equilibrium sruck where MC=MR.
Ans-2)
when average variable cost equals to price, it will be last point of production. If variable cost goes down from minimum variale cost then firm will stop production.
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1. Suppose Janet Sells papayas at a perfectly competitive market
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