Economics (MindTap Course List)
13th Edition
ISBN: 9781337617383
Author: Roger A. Arnold
Publisher: Cengage Learning
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Chapter 22.2, Problem 2ST
To determine
Explain whether the firm continues its production or shuts down the production.
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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.
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“The firm’s entire marginal cost curve is its short-run supply curve.” Is the preceding statement true or false? Why?
Chapter 22 Solutions
Economics (MindTap Course List)
Ch. 22.1 - Prob. 1STCh. 22.1 - Prob. 2STCh. 22.1 - Prob. 3STCh. 22.1 - Prob. 4STCh. 22.2 - Prob. 1STCh. 22.2 - Prob. 2STCh. 22.2 - Prob. 3STCh. 22.2 - Prob. 4STCh. 22.3 - Prob. 1STCh. 22.3 - Prob. 2ST
Ch. 22.3 - Prob. 3STCh. 22.3 - Prob. 4STCh. 22.4 - Prob. 1STCh. 22.4 - Prob. 2STCh. 22 - Prob. 1QPCh. 22 - Prob. 2QPCh. 22 - Prob. 3QPCh. 22 - Prob. 4QPCh. 22 - Prob. 5QPCh. 22 - Prob. 6QPCh. 22 - Prob. 7QPCh. 22 - Prob. 8QPCh. 22 - Prob. 9QPCh. 22 - Prob. 10QPCh. 22 - Prob. 11QPCh. 22 - Prob. 12QPCh. 22 - Prob. 13QPCh. 22 - Prob. 14QPCh. 22 - Prob. 15QPCh. 22 - Many plumbers charge the same price for coming to...Ch. 22 - Prob. 17QPCh. 22 - Prob. 18QPCh. 22 - Prob. 1WNGCh. 22 - Prob. 2WNGCh. 22 - According to the accompanying table, what quantity...Ch. 22 - Prob. 4WNGCh. 22 - Prob. 5WNGCh. 22 - Prob. 6WNGCh. 22 - Prob. 7WNGCh. 22 - Prob. 8WNGCh. 22 - Prob. 9WNGCh. 22 - Prob. 10WNG
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- Determine a firm’s profit-maximizing decision in the short run.arrow_forwardIn general, supply and demand are often in elastic in the short run, so that shifts in either demand or supply can cause:arrow_forwardpart 1. Leave 'r' and 'w' as constants. Solve the cost minimization problem to find L*(q) and K*(q). Then find the cost function C(q). part 2. At what price would the firm choose to shutdown and not produce? Provide calculations.arrow_forward
- If the price of the good is $100, what is the firm's profit in the short-run equilibrium?arrow_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 firm’s marginal cost is MC(q)=10+6q. For which prices does the firm shut down? Find a formula for the quantity supplied q in terms of the market price, p.arrow_forward
- The graph below shows the demand and cost conditions facing a price-setting firm. What is the maximum amount of profit the firm can earn?arrow_forwardWhich of the following best applies to the distinction between the "long run" and the "short run"? The short run is a period of approximately 1-6 months while the long run is any time frame which is longer. In the short run, only new firms may enter, while in the long-run firms may either enter or exit the market. The rationing function of price is a short-run phenomenon whereas the guiding function is a long-run phenomenon. All of these statements are correct.arrow_forwardCan these be answered as well? Derive the firm's average cost and average variable cost curves. What q should the firm choose so as to maximize its profit if the market price is p?arrow_forward
- A firm produces a product in a competitive industry and has a total cost function C = 80 + 4q + 2q2 and a marginal cost function MC = 4 + 4q. At the given market price of $28, the firm is producing 7 units of output. Is the firm maximizing its profit? What quantity of output should the firm produce in the long run?arrow_forwardIn order to maximize profit, the firm will choose to produce where marginal revenue is equal to marginal costarrow_forwardUsing curves, graphically, a firm will shutdown if what? What is an output at which the firm makes a normal profit but not economic profit?arrow_forward
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