(15) What is the minimum price needed by the firm to break even (i.e., earn zero economicprofits)? Explain.(16) What is the shutdown price? Explain. Consider the following daily product and cost schedule for a profit maximizing firm operating in aperfectly competitive market.OutputLabor Output00110225453456760707575FC200VC0Cost FunctionsTCMC870Assume the only variable cost is labor which is paid a rate of $100 per day.AVCATC

Total cost is the sum of fixed costs and variable costs. Fixed costs are the total obligations of…

Answered: (15) What is the minimum price needed…

(15) What is the minimum price needed by the firm to break even (i.e., earn zero economic profits)? Explain. (16) What is the shutdown price? Explain.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Question

(15) What is the minimum price needed by the firm to break even (i.e., earn zero economic
profits)? Explain.
(16) What is the shutdown price? Explain.

Consider the following daily product and cost schedule for a profit maximizing firm operating in a
perfectly competitive market.
Output
Labor Output
0
0
1
10
2
25
45
3
4
5
6
7
607075
75
FC
200
VC
0
Cost Functions
TC
MC
8
70
Assume the only variable cost is labor which is paid a rate of $100 per day.
AVC
ATC

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Step 1: Introduce Total Cost, Marginal Cost and Average Cost

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Step 2: Complete the given table

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Step 3: Find the break even price and shut down price of the firm

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