   Chapter 9, Problem 1WNG

Chapter
Section
Textbook Problem

Given the following information, state whether the perfectly competitive firm should shut down or continue to operate in the short run: a. Q = 100; P = $10; AFC =$3; AVC = $4. b. Q =70; P =$5; AFC = $2; AVC=$7. c. Q =150; P = $7; AFC =$5; AVC = \$6.

(a)

To determine

Identify whether the perfectly competitive firm would shut down or continue the production as per the first condition.

Explanation

As per the first condition (Q=100,P=10,AFC=3,AVC=4), a firm under perfectly compet

(b)

To determine

Identify whether the perfectly competitive firm would shut down or continue the production as per the second condition.

(c)

To determine

Identify whether the perfectly competitive firm would shut down or continue the production as per the third condition.

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