Homework Help is Here – Start Your Trial Now!
Business
Economics
18 16 14 12 P=MR: 10 Po MRo 6 4 2 O2 4 68 10 12 14 16 18 20 22 24 26 28 30 32 34 Quantity Utilize the graph above, which illustrates average fixed costs, average variable costs, average total costs, and marginal costs of production for a firm in a perfectly competitive market, to answer the following question. If the price is Po what should the firm do? The firm should decrease production because marginal revenue is greater than marginal cost. Therefore, the firm has not maximized operating profits. O The firm should exit the market because fims will soon enter. This will drive the price below ATC, which will cause the firm to eam economic losses. O The firm should shut down in the long-run because price is below AVC. In the long-run, they will assess the market conditions to see whether they should reopen for business or exit the market They will reopen if price remains below AVC O The firm shoud shut down in the short-run because price is below AVC. In the long-run, they will assess the market conditions to see whether they should reopen for business or exit the market O The fem should increase production because marginal cost is less than marginal revenue. Therefore, the firm has not maximized operating economic profits. Il app.honorlock.com is sharing your screen. Stop sharing Hide E Eom Guidelines N O

18 16 14 12 P=MR: 10 Po MRo 6 4 2 O2 4 68 10 12 14 16 18 20 22 24 26 28 30 32 34 Quantity Utilize the graph above, which illustrates average fixed costs, average variable costs, average total costs, and marginal costs of production for a firm in a perfectly competitive market, to answer the following question. If the price is Po what should the firm do? The firm should decrease production because marginal revenue is greater than marginal cost. Therefore, the firm has not maximized operating profits. O The firm should exit the market because fims will soon enter. This will drive the price below ATC, which will cause the firm to eam economic losses. O The firm should shut down in the long-run because price is below AVC. In the long-run, they will assess the market conditions to see whether they should reopen for business or exit the market They will reopen if price remains below AVC O The firm shoud shut down in the short-run because price is below AVC. In the long-run, they will assess the market conditions to see whether they should reopen for business or exit the market O The fem should increase production because marginal cost is less than marginal revenue. Therefore, the firm has not maximized operating economic profits. Il app.honorlock.com is sharing your screen. Stop sharing Hide E Eom Guidelines N O

Essentials of Economics (MindTap Course List)
Essentials of Economics (MindTap Course List)
8th Edition
ISBN:9781337091992
Author:N. Gregory Mankiw
Publisher:N. Gregory Mankiw
Chapter14: Monopoly
Section: Chapter Questions
Problem 10PA
See similar textbooks
icon
Related questions
Question
IV 18 16 14 12 %3D Pz=MR: 10 PomMR. 4 8 10 12 14 16 18 20 22 24 26 28 30 32 34 Quantity 024 6 Utilize the graph above, which illustrates average fixed costs, average variable costs, average total costs, and marginal costs of production for a firm in a perfectly competitive market, to answer the following question. If the price is Po what should the firm do? The firm should decrease production because marginal revenue is greater than marginal cost. Therefore, the firm has not maximized operating profits O The firm should exit the market because firms will soon enter. This will drive the price below ATC, which will cause the firm to eam economic losses. O The firm should shut down in the long-run because price is below AVC. In the long-run, they will assess the market conditions to see whether they should reopen for business or exit the market. They will reopen if price remains below AVC O The firm should shut down in the short-run because price is below AVC. In the long-run, they will assess the market conditions to see whether they should reopen for business or exit the market. O The frm should increase production because marginal cost is less than marginal revenue. Therefore, the firm has not maximized operating economic profits Il app.honorlock.com is sharing your screen, Stop sharing Hide E Eom Guidines NO
Transcribed Image Text:IV 18 16 14 12 %3D Pz=MR: 10 PomMR. 4 8 10 12 14 16 18 20 22 24 26 28 30 32 34 Quantity 024 6 Utilize the graph above, which illustrates average fixed costs, average variable costs, average total costs, and marginal costs of production for a firm in a perfectly competitive market, to answer the following question. If the price is Po what should the firm do? The firm should decrease production because marginal revenue is greater than marginal cost. Therefore, the firm has not maximized operating profits O The firm should exit the market because firms will soon enter. This will drive the price below ATC, which will cause the firm to eam economic losses. O The firm should shut down in the long-run because price is below AVC. In the long-run, they will assess the market conditions to see whether they should reopen for business or exit the market. They will reopen if price remains below AVC O The firm should shut down in the short-run because price is below AVC. In the long-run, they will assess the market conditions to see whether they should reopen for business or exit the market. O The frm should increase production because marginal cost is less than marginal revenue. Therefore, the firm has not maximized operating economic profits Il app.honorlock.com is sharing your screen, Stop sharing Hide E Eom Guidines NO
Expert Solution
trending now

Trending now

This is a popular solution!

steps

Step by step

Solved in 2 steps

SEE SOLUTIONCheck out a sample Q&A here
Blurred answer
Knowledge Booster
Virtual Market Place
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, economics and related others by exploring similar questions and additional content below.
Similar questions
  • SEE MORE QUESTIONS
Recommended textbooks for you
Essentials of Economics (MindTap Course List)
Essentials of Economics (MindTap Course List)
Economics
ISBN:
9781337091992
Author:
N. Gregory Mankiw
Publisher:
Cengage Learning
Economics: Private and Public Choice (MindTap Cou…
Economics: Private and Public Choice (MindTap Cou…
Economics
ISBN:
9781305506725
Author:
James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson
Publisher:
Cengage Learning
Microeconomics: Private and Public Choice (MindTa…
Microeconomics: Private and Public Choice (MindTa…
Economics
ISBN:
9781305506893
Author:
James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson
Publisher:
Cengage Learning
Economics:
Economics:
Economics
ISBN:
9781285859460
Author:
BOYES, William
Publisher:
Cengage Learning
SEE MORE TEXTBOOKS