Answer briefly the following questions (a) Why should a firm that incurs losses choose to produce rather than shut down?...
Answer briefly the following questions
(a) Why should a firm that incurs losses choose to produce rather than shut down? (b) What happens to the short run supply when the fix cost increases?
Homework Answers
A) when price is greater than min of AVC and less than ATC then firms incur loss but still it is beneficial for the firm to produce in short run because if firms shuts down then firm incur a loss=Total fix cost
However when firm produces at a point when price > AVC which means firms get positive profit when good is produced.
b) marginal cost curve is the supply curve of the firm in short run given price>min of AVC. When fix cost increases firms marginal cost remains the same which means supply curve will remain same
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Answer briefly the following questions (a) Why should a firm that incurs losses choose to produce rather than shut down?...
29. At what price will the firm choose to shut down rather than stay in business?...
29. At what price will the firm choose to shut down rather than stay in business? a. $5 b. $6.75 c. $8.50 d. $13 30. In the long run, firms in a perfectly competitive industry a. Produce a level of output that is above allocative efficiency b. Produce where price is equal to average total cost c. Produce where fixed costs are maximized d. Can earn positive economic profit 31. If a firm in a perfectly competitive industry is currently...
To minimize losses in the short run, a perfectly competitive firm should shut down if… a....
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...
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....
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...
A firm should not necessarily shut down if: Select one: a. firms suffer losses and the...
A firm should not necessarily shut down if: Select one: a. firms suffer losses and the price is below variable costs. b. price is less than average variable cost. C. total revenue is less than total variable cost. d. firms suffer losses and the price is above variable costs. e. the demand curve facing the firm lies below its average variable cost curve. Previous page 4 5 o 6
11. A firm sells 30 units of its product at a price of $5 per unit. It incurs a fixed cost of $100 and a variable cost o...
11. A firm sells 30 units of its product at a price of $5 per unit. It incurs a fixed cost of $100 and a variable cost of $20. The firm's profit is ________. a. $50 b. $100 c. $150 d. $30 15. A firm is seeing a $500 loss in the short run. The fixed cost of operation for this firm is $1,000. What is the best decision for this firm in the short run? a. This firm should...
A firm is seeing a $500 loss in the short run. The fixed cost of operation...
A firm is seeing a $500 loss in the short run. The fixed cost of operation for this firm is $1,000. What is the best decision for this frm in the short run? e This firm should shut down production immediately o This firm should produce more than what it is aurrently producing O This firm should not shut down production in the short run. eThere is not enough information provided to answer. 1 pts Question 16 A firm is...
Question 16. Where is the shut down point in one of the following? Select one: a....
Question 16. Where is the shut down point in one of the following? Select one: a. Price is equal to average variable cost. b. Price is equal to average total cost. c. Price is between average total cost and average variable cost. d. Price is above average total cost. Question 17. Which of the following best descibes the relationship between supply curve and the marginal cost curve for the purely competitive firm in the short run? Select one: a. The...
D 15. A firm is seeing a $500 loss in the short run. The fixed cost of operation for this firm is $1,000. What is...
D 15. A firm is seeing a $500 loss in the short run. The fixed cost of operation for this firm is $1,000. What is the best decision for this firm in the short run? This firm should shut down production immediately. This firm should produce more than what it is currently producing. This firm should not shut down production in the short run. There is not enough information provided to answer.
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...
29. At what price will the firm choose to shut down rather than stay in business? a. $5 b. $6.75 c. $8.50 d. $13 30. In the long run, firms in a perfectly competitive industry a. Produce a level of output that is above allocative efficiency b. Produce where price is equal to average total cost c. Produce where fixed costs are maximized d. Can earn positive economic profit 31. If a firm in a perfectly competitive industry is currently...
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....
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...
A firm should not necessarily shut down if: Select one: a. firms suffer losses and the price is below variable costs. b. price is less than average variable cost. C. total revenue is less than total variable cost. d. firms suffer losses and the price is above variable costs. e. the demand curve facing the firm lies below its average variable cost curve. Previous page 4 5 o 6
A firm is seeing a $500 loss in the short run. The fixed cost of operation for this firm is $1,000. What is the best decision for this frm in the short run? e This firm should shut down production immediately o This firm should produce more than what it is aurrently producing O This firm should not shut down production in the short run. eThere is not enough information provided to answer. 1 pts Question 16 A firm is...
D 15. A firm is seeing a $500 loss in the short run. The fixed cost of operation for this firm is $1,000. What is the best decision for this firm in the short run? This firm should shut down production immediately. This firm should produce more than what it is currently producing. This firm should not shut down production in the short run. There is not enough information provided to answer.
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...
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