Art's Garage operates in a perfectly competitive market. At the point where marginal cost equals marginal revenue, ATC=$25, AVC=$18, and price per unit is $20. Given this situation, in the short run, Art will shut down immediately. O Art will shut down, but only after the lease on the garage explires. O Art will break even. OArt will sustain losses in the short run but will continue to operate.

Art's Garage operates in a perfectly competitive market. At the point where marginal cost equals marginal revenue, ATC=$25, AVC=$18, and price per unit is $20. Given this situation, in the short run, Art will shut down immediately. O Art will shut down, but only after the lease on the garage explires. O Art will break even. OArt will sustain losses in the short run but will continue to operate.

Managerial Economics: A Problem Solving Approach

5th Edition

ISBN:9781337106665

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

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

Chapter9: Market Structure And Long-run Equilibrium

Section: Chapter Questions

Problem 7MC

See similar textbooks

Similar questions

T-Shirt Enterprises is selling in a purely competitive market. It is producing 3,000 units, selling them for $2.00 each. At this level of output, the average total cost is 2.50 and the average variable cost is $2.20. Based on these data, the firm should Multiple Choice shut down in the short run. decrease output to 2,500 units. continue to produce 3,000 units. increase output to 3,500 units.
Billy Idol's Department Store operates in a perfectly competitive market. At the point where MC=MR, ATC = $250, AVC = $175, and the price per unit is $180. In this situation, Group of answer choices Billy is earning a positive economic profit Billy should shut down immediately Billy is losing money in the short run, but should continue to operate the market price will rise in the short run to increase profits
A firm sells its product in a perfectly competitive market where other firms charge a price of $70 per unit. The firm estimates its total costs as C(Q) = 40 + 10Q + 2Q2. a. How much output should the firm produce in the short run? units b. What price should the firm charge in the short run? $ c. What are the firm’s short-run profits? $ d. What adjustments should be anticipated in the long run? multiple choice Exit will occur since these economic profits are too low. No firms will enter or exit at these profits. Entry will occur until economic profits shrink to zero.
Question 8 Art’s Garage operates in a perfectly competitive market. At the point where marginal cost equals marginal revenue, ATC=$20, AVC=$18, and price per unit is $10. Given this situation, in the short run, Art will shut down immediately. Art will shut down, but only after the lease on the garage expires. Art will sustain losses in the short run but will continue to operate. Art will break even.
The market for drones is perfectly competitive. Assume for simplicity that fractions of everything, including firms, is possible. We have identical firms, each with a Total Cost curve of TC=712+q^2 and Marginal Cost curve MC=2q. Market demand is Q=895-2P. What is the long-run equilibrium market price? Enter a number only, drop the $ sign.
Claude's Copper Clappers sells clappers for $65 each in a perfectly competitive market. At its present level of output, Claude's marginal cost is $65, average variable cost is $45, and average total cost is $67. To maximize his profit or minimize his loss, Claude should _____ Group of answer choices shut down. increase output. reduce output but not to zero. raise the price. continue producing the present level of output.
A firm sells its product in a perfect competitive market where other firms charges a price of $90 per units. the firms total cost are C(Q)=50+10Q+20Q^2 What price should the firm charge in the short run How much output should the firm produce in the short run What are the firms short run profits what adjustment should be anticipated in the long run
Alpha, a company is selling in a perfectly competitive market. Its output is 100 units which sells for $4 each. At this level of output, total cost is $500, total fixed cost is $110, and marginal cost is constant at $4. In the short run, the firm should Group of answer choices reduce output to about 40 units reduce output to about 80 units continue to produce 100 units produce zero units of output There is not enough information to tel
A company in a perfectly competitive market produces an output level Q = 100 where marginal revenue is equal to marginal cost and has the following revenue and cost levels: Marginal cost curve intersects the average variable cost curve at $150. Marginal cost curve intersects the average total cost curve at $200. Marginal cost curve intersects the marginal revenue curve at $170. At Q = 100, ATC = $210 and AVC = $155 Is this firm making a profit or a loss at Q = 100? What would you suggest this firm should do in the short run? Explain.
A profit - maximizing firm in a competitive market is currently producing 100 units of output. It has average revenue of $10, average total cost of $8, and fixed cost of $ 200. Complete the following table by indicating the firm's profit, marginal cost, and average variable cost. Profit Marginal Cost Average Variable Cost (Dollars) (Dollars) (Dollars) The efficient scale of the firm must beless than 100 units.
The covid 19 pandemic has had a significant impact on the clothing industry. With more people working from home, the demand for business attire dramatically decreased. In the short run, a struggling business attire retailer should temporarily shut down if at the profit-maximizing or loss minimizing point the marginal revenue curve is
If a purely competitive firm is facing a situation where the price of its product is lower than the average cost, then all of the following apply, except Multiple Choice A) the firm is suffering losses, and if things are not expected to improve, the firm will leave the industry. B) the firm may be earning some accounting profits, but less than what it could earn elsewhere. C) other firms will want to enter the industry because of the positive economic profits. D) the firm may earn economic profits in the long run if it expands its plant in order to exploit economies of scale.