ENGR.ECONOMIC ANALYSIS
ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN: 9780190931919
Author: NEWNAN
Publisher: Oxford University Press
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Hello! Could I get this question written out and explained, step by step? Thank you so much.

**Scenario Description:**

Bob is a general contractor in the construction industry. Suppose the construction industry is perfectly competitive. In the short run, assume the marginal cost of building new homes equals the market price of a new home when Bob builds 10 new homes. At this level of output, Bob's average fixed cost of building a new home is $210,000 and his average variable cost is $200,000 per home (so his average total cost is $410,000 per home). If new homes are selling for $190,000, should he continue to produce 10 new homes in the short run or shut down?

**Question:**

In the short run, Bob should [select action] and lose $____. (Enter your response as a whole number.)
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Transcribed Image Text:**Scenario Description:** Bob is a general contractor in the construction industry. Suppose the construction industry is perfectly competitive. In the short run, assume the marginal cost of building new homes equals the market price of a new home when Bob builds 10 new homes. At this level of output, Bob's average fixed cost of building a new home is $210,000 and his average variable cost is $200,000 per home (so his average total cost is $410,000 per home). If new homes are selling for $190,000, should he continue to produce 10 new homes in the short run or shut down? **Question:** In the short run, Bob should [select action] and lose $____. (Enter your response as a whole number.)
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