Your minimum AVC will determine if you should continue to produce or shut down. 17. If market price is below minimum AVC firms should 18. If market price is greater than or equal to minimum AVC firms should

Your minimum AVC will determine if you should continue to produce or shut down. 17. If market price is below minimum AVC firms should 18. If market price is greater than or equal to minimum AVC firms should

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Concept explainers

Profit Maximization

Economic activity is related to the use of scarce resources of the economy that are used for producing goods and services which are required to satisfy various demands of the people. In other words, it can be said that it is all about satisfying the unlimited demands of individuals with the limited resources available. The production decision is taken by the producers or the firms. In economics, the terms ‘producers’, ‘suppliers’, and ‘firms’ are interchangeable. Now the question arises, what does a firm actually mean?

Question

Your minimum AVC will determine if you should continue to produce or shut down.

17. If market price is below minimum AVC firms should _________________________.

18. If market price is greater than or equal to minimum AVC firms should _____________________.

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