• Suppose you are the manager of a watchmaking firm operating in a perfectly competitive market. • Your total cost of production in the short run is given by: SRTC- 95 + 9°g + 0.6°q, where q represents the units of output. • The current market price for watches is $85 and your optimal (profit-maximizing) level of output is 63.3. In the short run, how low can the price go before you decide to shut down? In other words, what is the short-run shut-down price for your firm? CHECK ANSWER

• Suppose you are the manager of a watchmaking firm operating in a perfectly competitive market. • Your total cost of production in the short run is given by: SRTC- 95 + 9°g + 0.6°q, where q represents the units of output. • The current market price for watches is $85 and your optimal (profit-maximizing) level of output is 63.3. In the short run, how low can the price go before you decide to shut down? In other words, what is the short-run shut-down price for your firm? CHECK ANSWER

Economics: Private and Public Choice (MindTap Course List)

16th Edition

ISBN:9781305506725

Author:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson

Publisher:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson

Chapter22: Price Takers And The Competitive Process

Section: Chapter Questions

Problem 6CQ: Suppose that the development of a new drought-resistant hybrid seed corn leads to a 50 percent...

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