The following in formation is available for a company that operates in a perfectly competitive market. Current output 5000 units Current market price $5 Total cost $25,000 Marginal cost $4 Total variable cost $20,000 What is the best action for this firm. a) Increase output in the short run and stay in the market the long run b) Increase output in the short run and decrease output in the long run c) Shutdown in the short run and exit in the long run d) shut down in the short run and produce in the long run. e) reduce output in the short run and increase output in the long run
The following in formation is available for a company that operates in a perfectly competitive market. Current output 5000 units Current market price $5 Total cost $25,000 Marginal cost $4 Total variable cost $20,000 What is the best action for this firm. a) Increase output in the short run and stay in the market the long run b) Increase output in the short run and decrease output in the long run c) Shutdown in the short run and exit in the long run d) shut down in the short run and produce in the long run. e) reduce output in the short run and increase output in the long run
Microeconomics: Private and Public Choice (MindTap Course List)
16th Edition
ISBN:9781305506893
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
Chapter9: Price Takers And The Competitive Process
Section: Chapter Questions
Problem 15CQ
Related questions
Question
100%
The following in formation is available for a company that operates in a
| Current output | 5000 units |
| Current market price | $5 |
| Total cost | $25,000 |
| Marginal cost | $4 |
| Total variable cost | $20,000 |
What is the best action for this firm.
a) Increase output in the short run and stay in the market the long run
b) Increase output in the short run and decrease output in the long run
c) Shutdown in the short run and exit in the long run
d) shut down in the short run and produce in the long run.
e) reduce output in the short run and increase output in the long run
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
This is a popular solution!
Trending now
This is a popular solution!
Step by step
Solved in 2 steps
Knowledge Booster
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.Recommended textbooks for you
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: 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
Managerial Economics: Applications, Strategies an…
Economics
ISBN:
9781305506381
Author:
James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris
Publisher:
Cengage Learning
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: 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
Managerial Economics: Applications, Strategies an…
Economics
ISBN:
9781305506381
Author:
James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris
Publisher:
Cengage Learning
Exploring Economics
Economics
ISBN:
9781544336329
Author:
Robert L. Sexton
Publisher:
SAGE Publications, Inc