Firm E has cost function C(q) = 3 + 10, where 3q² is the firm's variable cost, and 10 is a short run sunk fixed cost. The market price is p = 6, and if firm E stays in operation it will produce q= 1 unit of output. In the short run, should Firm E operate, or should it shut down? O Shut Down, because profit from operating is negative O Operate, because profit from operating is positive O Shut down, because the fixed cost outweighs the marginal revenue of operating O Operate, because profit from operating is greater than profit from shutting down

Firm E has cost function C(q) = 3 + 10, where 3q² is the firm's variable cost, and 10 is a short run sunk fixed cost. The market price is p = 6, and if firm E stays in operation it will produce q= 1 unit of output. In the short run, should Firm E operate, or should it shut down? O Shut Down, because profit from operating is negative O Operate, because profit from operating is positive O Shut down, because the fixed cost outweighs the marginal revenue of operating O Operate, because profit from operating is greater than profit from shutting down

Microeconomic Theory

12th Edition

ISBN:9781337517942

Author:NICHOLSON

Publisher:NICHOLSON

Chapter2: Mathematics For Microeconomics

Section: Chapter Questions

Problem 2.8P

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