Which of the following best explains why a firm would not stop producing if the loss is less than its fixed costs?O Fixed costs are paid regardless of whether something or nothing is produced, and the firm receives enough revenue per unit to cover ATC andsome MC.O Fixed costs are paid regardless of whether something or nothing is produced, and the firm receives enough revenue per unit to cover ATC andsome FC.O Fixed costs are paid regardless of whether something or nothing is produced, and the firm receives enough revenue per unit to cover AVC andsome FC.O Fixed costs are paid regardless of whether something or nothing is produced, and the firm receives enough revenue per unit to cover AVC andsome MC.

The right answer for why a company wouldn't cease operations if the loss was less than its fixed…

Answered: Which of the following best explains…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

See similar textbooks

Similar questions

Assume that the most efficient production technology available for making vitamin pills has the cost structure given in the following table. Note that output is measured as the number of bottles of vitamins produced per day and that costs include a normal profit. What is ATC per unit for each level of output listed in the table? Instructions: Round your answers to 2 decimal places. Output TC MC ATC 25,000 100,000 $ 0.50 50,000 150,000 1.00 75,000 187,500 2.50 100,000 275,500 3.00 Is this a decreasing-cost industry? (Click to select) Suppose that the market price for a bottle of vitamins is $2.5 and that at that price the total market quantity demanded is 75,000,000 bottles. How many firms will there be in this industry? firm(s). Suppose that, instead, the market quantity demanded at a price of $2.5 is only 75,000. How many firms do you expect there to be in this industry? ) firm(s). Review your answers to parts b, c, and d. Does the level of demand determine this industry's market…
Consider the following costs of a typical firm in a purely competitive industry. The firm has no fixed costs (average total cost = average variable cost). Average Total Cost Quantity Marginal Cost 1 $28.00 2 20.50 $13.00 3 16.67 9.00 4 15.25 11.00 16.00 19.00 6 18.83 33.00 a. Given only the information available, what would you expect product price to be in the long run? O $11.00 O $19.00 O $16.00 O $15.25 b. What would you expect price to be in the short run? O $9.00 O $13.00 O $11.00 O $19.00
You learn that a firm's average total costs (ATC) and average variable costs (AVC) are exactly equal. What does that mean? O Marginal cost is zero O ATC and AVC must be equal to zero O Average fixed costs (AFC) are zero O Economic profit is positive O Economic profit is negative
Assume that the most efficient production technology available for making vitamin pills has the cost structure given in the following table. Note that output is measured as the number of bottles of vitamins produced per day and that costs include a normal profit. Output TC MC ATC 50,800 $170,000 $0.60 100,800 220,000 1.10 150,800 257,500 1.71 200,800 365,500 2.45 Instructions: Enter your answers rounded to two decimal places. a. What is ATC per unit for each level of output listed in the table? Enter your answers in the table above. b. Are there economies of scale in production? Yes c. Suppose that the market price for a bottle of vitamins is $1.71. At that price the total market quantity demanded is 301,600,000 bottles. How many firms will be in this industry? firm(s) d. Suppose that, instead, the market quantity demanded at a price of $1.71 is only 150,800. How many firms will be in this industry? firm(s) e. Review your answers to parts b, c, and d. Does the level of demand determine…
$ 0 Based on the graph above, the firm is earning: ο ο ο Zero economic profits Zero accounting profits MC Zero normal profits ATC AVC D = MR We can say nothing about this firm's profit or loss situation
The owner of Tie-Dyed T-shirts, a perfectly competitive firm, hires you to give him economic advice. He tells you that the market price for his shirts is $15 and that he is currently producing 200 shirts at an AVC of $10 and an ATC of $20. What would you recommend that he do? O a. Tell him that you cannot make any recommendations until you know what his fixed costs are. O b. Continue producing in the short run, as his loss from production is less than his fixed costs, but exit the industry in the long run if there are no changes in economic conditions. Oc Shut down in the short run, as he is incurring a loss, and leave the industry in the long run, if there are no changes in economic conditions. O d. Continue to produce in the short run, even though he is earning a loss, and expand production in the future hoping to increase market share and total revenue.
Price and Cost ($) Given the information from the figure, if price equals $0.40, the firm should ATC 1.2 AVC 0.8 0.6 0.4 0.2 0.2 0.4 9'0 0.8 Output 1.2 O stay open because it is making an economic profit O stay open in the short run only because it is operating at an economic loss O stay open because it is making a normal profit O shut down in the short run because it will minimize its loss
,
on the long run average cost curve can you mark where this would be on the curve?
Quantity Price Total Fixed Costs Variale Cost Total Costs Average Variable Costs Average Total Cost Marginal Cost Total Revenue Marginal Revenue 0 35 25 0 1 35 25 20 2 35 25 25 3 35 25 35 4 35 25 52 5 35 25 80 If this firm produces a quantity of zero units, what is the total profits? What is the firm's marginal cost at a production level of two units? What is the average variable cost at a production level of five units? This firm becomes profitable producing at a quantity of ___ units. The average total cost is smallest at which level of production? At what quantity should this firm produce to maximize their profits based on your calculations? The total costs to produce four units is __________ while the average total cost to produce four units is _________.
QUESTION 1 DA MC ATC AVC Quantity Observe the graph above. Based on the original price being set at P1, what assumptions would you make about the company's condition and what might happen O The company is profitable and making a very good profit O Company is barely at the break-even point or even below that point because the price of the product is set to cover just its variable costs which means the company would not survive long if the price of P1 remains the same O Company is making small profits in the short run O None of the above.
ps ndar 2 You're running a small firm, and you have an estimate of both your cost function and your demand curve. Your cost function is TC-791-11q+5g 2. while your inverse demand curve is P-870-0.4q, where P is the price of one unit of your output and q is the quantity of units produced and sold If you wanted to maximize profit. what quantity would you produce? Please round your answer to the nearest whole number (ie, no decimal places) Type your answer...

SEE MORE QUESTIONS

Recommended textbooks for you

ENGR.ECONOMIC ANALYSIS

Economics

ISBN:

9780190931919

Author:

NEWNAN

Publisher:

Oxford University Press

Principles of Economics (12th Edition)

Economics

ISBN:

9780134078779

Author:

Karl E. Case, Ray C. Fair, Sharon E. Oster

Publisher:

PEARSON

Engineering Economy (17th Edition)

Economics

ISBN:

9780134870069

Author:

William G. Sullivan, Elin M. Wicks, C. Patrick Koelling

Publisher:

PEARSON

ENGR.ECONOMIC ANALYSIS

Economics

ISBN:

9780190931919

Author:

NEWNAN

Publisher:

Oxford University Press

Principles of Economics (12th Edition)

Economics

ISBN:

9780134078779

Author:

Karl E. Case, Ray C. Fair, Sharon E. Oster

Publisher:

PEARSON

Engineering Economy (17th Edition)

Economics

ISBN:

9780134870069

Author:

William G. Sullivan, Elin M. Wicks, C. Patrick Koelling

Publisher:

PEARSON

Principles of Economics (MindTap Course List)

Economics

ISBN:

9781305585126

Author:

N. Gregory Mankiw

Publisher:

Cengage Learning

Managerial Economics: A Problem Solving Approach

Economics

ISBN:

9781337106665

Author:

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

Publisher:

Cengage Learning

Managerial Economics & Business Strategy (Mcgraw-…

Economics

ISBN:

9781259290619

Author:

Michael Baye, Jeff Prince

Publisher:

McGraw-Hill Education

SEE MORE TEXTBOOKS