When total fixed costs increase, a - the profit - maximizing level of output falls. b the firm may be forced to shut down if total fixed costs get too high. c economic profit decreases. d all of the above occurs.

Firms minimize costs; thus, a firm earning short-run economic profits will choose to produce at the minimum point on its average total cost curve. Do you agree or disagree with this statement? A. Disagree: Firms earning profits will produce to the right of the minimum point on the average total cost curve. B. Disagree: A firm minimizing costs will produce where marginal cost equals the average total cost of production. C. Disagree: Firms earning short-run profits will produce where the difference between price and MC is largest. D. Disagree: The minimum point on the average total cost curve is when output equals zero. E. Agree: Since firms seek to minimize costs, they will always produce at the minimum point on the ATC curve.

Ball Bearings, Inc., faces costs of production as follows:a. Calculate the company’s average fixed cost, average variable cost, average total cost,and marginal cost at each level of production.b. The price of a case of ball bearings is $50. Seeing that he can’t make a profit, thechief executive officer (CEO) decides to shut down operations. What is the firm’sprofit/loss? Was this a wise decision? Explain.c. Vaguely remembering his introductory economics course, the chief financial officertells the CEO it is better to produce 1 case of ball bearings, because marginal revenueequals marginal cost at that quantity. What is the firm’s profit/loss at that level ofproduction? Was this the best decision? Explain

7 What is the total variable cost? 8 Identify the firm's short-run supply curve. 9 Is the industry in a long-run equilibrium?

Suppose fixed costs are $10,000, variable costs are $40,000 and the price of the good is $10 and quantity of the good the firm sells is $10,000.  A. Caluclate Total Costs.  B. Caluclate Total Revenue.  C. Calculate the Firm's Profits.

Economics Question

Which of the following is correct if the firm described in Figure 7-4 decides to produce nothing?     a. Total cost will be zero.   b. Total fixed cost will be zero.   c. Total variable cost will be zero.   d. Average cost will be zero.   e. It is impossible for the firm to produce nothing in the short run.

1. A firm will shut down in the short run when (check all that apply) a. price is less than average fixed cost b. losses (negative of profits) are greater than fixed costs c. total revenue is less than variable cost d. total revenue is less than total cost e. price is less than average variable cost f. total revenue is less than fixed cost

Suppose a restaurant that is highly profitable during the summer months is unable to cover its total cost during the winter months. If it wants to maximize profits, the restaurant should a.lower its prices during the summer months. b.go a out of business immediately; losses should never be tolerated. c.continue operating during the winter months if it is able to cover its variable costs. d.shut down during the winter, even if it is able to cover its variable costs during that period.

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