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Refer to the diagram below:
Which point in the diagram is the shut-down point for the firm? Explain briefly
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- Under what conditions will a firm shut down temporarily? Explain theoretically and graphically.Under what conditions will a firm shut down temporarily? Explain.Delvin has a hot dog stand in a busy midtown area with similar stands on every block. The graph above shows the cost curves of Delvin’s Hot Dogs. The market price of a hot dog is $3. Answer the questions below and show all calculations where necessary. From the diagram, what is Delvin’s profit-maximizing output per day? Explain your answer. Calculate Delvin’s accounting profit per day. How will Delvin’s price and profit change in the long-run, assuming no change in technology or demand?
- The following table shows the output and total cost for a firm in a purely competitive industry Output TC AC MC 0 40 1 95 2 115 3 130 4 150 5 175 6 210 7 260 8 330 Is the firm operating in the short-run or long run? Give a reason to your answerThe Emerald Company, a firm in the perfectly competitive custom jewelry industry, asks you for your expert economic opinion. They tell you the following: Total revenue is $110,000, Total fixed costs are $80,000 Total variable costs are $100,000 Marginal cost is $220/unit Quantity produced is 550 unit What is your advice based upon the information above? Keep operating and do not change the current production level. Keep operating and increase production Keep operating but decrease production Shut-down immediatelyWhat is the term for the minimum level of output a firm must produce to cover its variable costs in the short run? a) Shutdown point b) Marginal cost point c) Average cost point d) Total cost point
- The shut-down point for a competitive firm is in the short run is whereWhat is the shutdown decision of the firm? How should a firm decide whether to continue business or shut down in the short run?Illustrate and explain the shape of the Long Run Industry Supply Curve for a Decreasing Cost Industry.
- Decide whether a firm making short-run losses should continue to operate or shut down its operations.Describe a firm’s decision to shut down and when to exit the market,and explain the difference between these choicesMCQ: The shut-down point for a firm in a perfectly competitive industry is: P = MR P = ATC P = MC P = AVC