Microeconomics
11th Edition
ISBN: 9781260507140
Author: David C. Colander
Publisher: McGraw Hill Education
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Chapter 13, Problem 14QE
To determine
The cost condition of
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if the price is less than lowest average variable cost the firm will shut down
What 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
Should a firm shut down if its weekly revenue is $1,000, its variable cost is $500, and its fixed cost is$800, of which $600 is avoidable if it shuts down? Explain.
Chapter 13 Solutions
Microeconomics
Ch. 13.1 - Prob. 1QCh. 13.1 - Prob. 2QCh. 13.1 - Prob. 3QCh. 13.1 - Prob. 4QCh. 13.1 - Prob. 5QCh. 13.1 - Prob. 6QCh. 13.1 - Prob. 7QCh. 13.1 - Prob. 8QCh. 13.1 - Prob. 9QCh. 13.1 - Prob. 10Q
Ch. 13 - Prob. 1QECh. 13 - Prob. 2QECh. 13 - Prob. 3QECh. 13 - Prob. 4QECh. 13 - Prob. 5QECh. 13 - Prob. 6QECh. 13 - Prob. 7QECh. 13 - Prob. 8QECh. 13 - Prob. 9QECh. 13 - Prob. 10QECh. 13 - Prob. 11QECh. 13 - Prob. 12QECh. 13 - Prob. 13QECh. 13 - Prob. 14QECh. 13 - Prob. 15QECh. 13 - Prob. 16QECh. 13 - Prob. 17QECh. 13 - Prob. 18QECh. 13 - Prob. 19QECh. 13 - Prob. 20QECh. 13 - Prob. 1QAPCh. 13 - Prob. 2QAPCh. 13 - Prob. 3QAPCh. 13 - Prob. 4QAPCh. 13 - Prob. 5QAPCh. 13 - Prob. 1IPCh. 13 - Prob. 2IPCh. 13 - Prob. 3IPCh. 13 - Prob. 4IPCh. 13 - Prob. 5IP
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Similar questions
- A firm should always shut down if its revenue is * a)less than its avoidable costs. b)declining. c)less than its total costs. d)less than its average fixed costsarrow_forwardThe intersection of the average variable cost curve and the marginal cost curve, which shows the price where the firm would lack enough revenue to cover its variable costs, is called the: Shutdown point Equilibrium Profit Lossarrow_forwardA competitive firm has a total cost function: TC = 100 + 25q − 8q2 + 2q3 and a marginal cost function MC = 25 − 16q + 6q2. Calculate the range of prices for which the firm will find it optimal to shut down.arrow_forward
- Under what conditions will a firm shut down temporarily? Explain theoretically and graphically.arrow_forwardwhen a firm is operating at the minimum of its............. cost curve it is at its shutdown point average variable marginal total average totalarrow_forwardImagine a firm in a perfectly competitive market has the short run cost function SRTC=200+10q+0.5q2, where q is the number of units they produce. What is the shut-down price for this firm?arrow_forward
- Derive theoretically and graphically the supply curve of an industry.arrow_forwardIf a firm is producing at a quantity in which the marginal cost exceeds marginal revenue, the firm _____.arrow_forwardA firm sells its product in a perfectly competitive market where other firms charge a price of $110 per unit. The firm estimates its total costs as C(Q) = 70 + 14Q + 2Q2. Thus, the marginal costs are MC(Q) = 14 + 4Q. How much output should the firm produce in the short run?arrow_forward
- If a firm sells its output at a price greater than ATC, it will earn economic profit. Is this true?arrow_forwardDecide whether a firm making short-run losses should continue to operate or shut down its operations.arrow_forwardConsider a firm in a Perfectly Competitive industry. Suppose the price in this industry is $26. The total cost (TC) function for each firm is TC = 0.05q^2 + 1,080. If the marginal cost (MC) function for the firm is MC = 0.1q, a)what is the profit maximizing quantity for the firm to produce? b)what is the profit for the firm at the profit maximizing point?arrow_forward
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