A profit-maximizing firm decides to shut-down production in the short-run. Its total fixed cost of production is $100, i.e. TFC = $100. Which of the following statements is true? a If the firm produced, the firm's revenues would have been lower than $100. b If the firm produced, the firm's total variable cost must be lower than $100. c If the firm produced, the firm's losses would have been higher than $100. d If the firm produced, the firm's total variable cost would have been higher than $100.

A profit-maximizing firm decides to shut-down production in the short-run. Its total fixed cost of production is $100, i.e. TFC = $100. Which of the following statements is true? a If the firm produced, the firm's revenues would have been lower than $100. b If the firm produced, the firm's total variable cost must be lower than $100. c If the firm produced, the firm's losses would have been higher than $100. d If the firm produced, the firm's total variable cost would have been higher than $100.

Managerial Economics: A Problem Solving Approach

5th Edition

ISBN:9781337106665

Author:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor

Publisher:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor

Chapter9: Market Structure And Long-run Equilibrium

Section: Chapter Questions

Problem 1MC

See similar textbooks

Similar questions

The relationship between the firm's average variable, average total, and marginal cost curves above: Marginal Reveue = Price = US $ 2.50 ; a) Use the graph to find the Firm's profit-maximizing output. b) If the firm maximizes its profit, how much profit does it make (about)? Should the firm stay in business? c) Will other firms with costs the same as Firms enter the market? Explain.
a) A profit-maximizing business incurs an economic loss of $10,000 per year. Its fixed cost is $15,000 per year. Should it produce or shut down in the short run? Should it stay in the industry or exit in the long run? b) Suppose instead that this business has a fixed cost of $6,000 per year. Should it produce or shut down in the short run? Should it stay in the industry or exit in the long run?
In the short run a firm can minimize costs by shutting down. minimize costs by going out of business. maximize profit by selling the factory. all of the above are correct. none of the above are correct.
Given the cost data in the table below, the firm will shut down and produce zero output if the market price falls below in which case the firm's loss is Average Total Variable Total Cost, Marginal Cost, Average Total Output, Q Variable Cost, Cost, TVCIQ) TC(Q) MC(Q) Cost, ATC(Q) AVCIQ) 80 $9.813.33 $11,813.33 $48.00 $122.67 $147.67 90 $10,260.00 $12,260.00 $42.00 $114.00 $136.22 100 $10,666.67 $12,666.67 $40.00 $106.67 $126.67 110 $11,073.33 $13,073.33 $42.00 $100.67 $118.85 120 $11,520.00 $13,520.00 $48.00 $96.00 $112.67 130 $12,046.67 $14,046.67 $58.00 $92.67 $108.05 140 $12,693.33 $14,693.33 $72.00 $90.67 $104.95 150 $13,500.00 $15,500.00 $90.00 $90.00 $103.33 160 $14,506.67 $16.506.67 $112.00 $90.67 $103.17 170 $15,753.33 $17,753.33 $138.00 $92.67 $104.43 180 $17,280.00 $19,280.00 $168.00 $96.00 $107.11 190 $19,126.67 $21,126.67 $202.00 $100.67 $111.19 200 $21,333.33 $23,333.33 $240.00 $106.67 $116.67 O $40; $12,666.67. O $90; $2,000. O $103.17: $2.000. $90; $0. O $90; $29,000. O…
If a firm's revenues do not cover its average variable costs, then that firm has reached its price taking point shutdown point marginal point opportunity margin
An economist estimated that the cost function of a single-product firm is C(Q) = 100 + 20Q + 15Q² + 10Q³ Based on this information, determine: a. The fixed cost of producing 10 units of output. b. The variable cost of producing 10 units of output. c. The shutdown price if the optimal quantity of units produced is 10. d. The breakeven price if the optimal quantity of units produced is 10. g. The marginal cost when Q = 10. Think about your derivatives.
A firm faces the following total cost curve in the short-term: TC₁=4+2Y;². The firm decided that it will not shutdown. The price is $28 per unit. Calculate the profit that the firm would make. Your Answer: Answer
The graph below shows a particular firms marginal revenue (mr) marginal cost (mc) and average total cost (atc) curves, where the market is competitive. Suppose that a new management team is brought in and that this team is initially less concerned about maximizing profits than it is simply about making a profit. What range of production quantities will allow the firm to operate while earning a profit? Give you're answer by dragging the qmin to Qmax lines into their correct positions. The output will need to lie somewhere between those limits.
Determine a firm’s profit-maximizing decision in the short run.
Suppose a firm is able to sell their product for a price of $3. You have the following information on the firm's output and cost. Output Implicit Costs Explicit Costs 700 $70 $100 Instructions: Enter amounts as a whole number. If the firm is earning a loss indicate with a negative sign (-). What is the firm's economic profit? $
Tex has a small plant that produces storm windows. Its total revenue function is TR 5.4Q, and the total cost function is TC = 30 + 3Q + 0.03Q2. a. What is the profit maximizing output for Tex? Show your work. What is his selling price? b. How much profit is he making? c. Now assume that Tex has fixed costs of only 5. With this different information, answer parts (a) and (b). How have fixed-cost changes influenced Tex's production decisions? d. Now assume that Tex has fixed costs of 55. How would your answer change to part (c)?
A profit-maximizing firm in a competitive market is currently producing 100 units of output. It has average revenue of $10, average total cost of $8, and fixed cost of $200. What is its profit? What is its marginal cost? What is its average variable cost?