A profit maximizing firm with short run total cost given by: TC = 5q² + 100q + 250 is currently earning a loss of $100. This firm should a. continue to operate despite the loss because the loss is greater than the fixed costs b. shut down because the loss is less than the fixed costs continue to operate despite the loss because the loss is less than the fixed costs d.shut down because the loss is greater than the fixed costs C.

A profit maximizing firm with short run total cost given by: TC = 5q² + 100q + 250 is currently earning a loss of $100. This firm should a. continue to operate despite the loss because the loss is greater than the fixed costs b. shut down because the loss is less than the fixed costs continue to operate despite the loss because the loss is less than the fixed costs d.shut down because the loss is greater than the fixed costs C.

Managerial Economics: A Problem Solving Approach

5th Edition

ISBN:9781337106665

Author:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor

Publisher:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor

Chapter5: Investment Decisions: Look Ahead And Reason Back

Section: Chapter Questions

Problem 10MC

See similar textbooks

Similar questions

The following diagram shows cost curves for a perfectly competitive firm. SMC 2.60 ATC AVC 1.60 1.50 0.80 0.70 0.60 500 800 1100 Output Price and cost (dollars)
If a firm shuts down, it A) makes zero economic profit. B) incurs an economic loss equal to its total variable cost. C) incurs an economic loss equal to its total fixed cost. D) makes a normal profit. E) might make an economic profit, zero economic profit, or incur an economic loss.
a) What is the averge total cost at which this firm reaches its break even point b) what is the average variable cost at which this firm reaches it shut down point?
A profit - maximizing firm in a competitive market is currently producing 100 units of output. It has average revenue of $10, average total cost of $8, and fixed cost of $ 200. Complete the following table by indicating the firm's profit, marginal cost, and average variable cost. Profit Marginal Cost Average Variable Cost (Dollars) (Dollars) (Dollars) The efficient scale of the firm must beless than 100 units.
Question 13 If a firm operating in a competitive industry shuts down in the short run, it can avoid paying Group of answer choices fixed costs. variable costs. all (total) costs. nothing. The firm must pay all its costs, even if it shuts down.
Price MC 101 ATC ab cd Quantity If the firm depicted in the graph above is attempting to maximize profit, it will: make enough to cover its variable costs but not its fixed costs. earn economic profits. incur a loss. earn just normal profits, that is, zero economic profits. MR
If a firm's revenues do not cover its average variable costs, then that firm has reached its price taking point shutdown point marginal point opportunity margin
In the short run, the Sure-Screen T-Shirt Company is producing 500 units of output. Its average variable costs are $2.00 and its average fixed costs are $.50. The firm's total costs Multiple Choice are $2.50. are $1,250. are $750. are $1,100.
When a firm maximizes profit in the short run, it should consider: all costs, including sunk costs, but not fixed costs. only variable costs. all costs, including sunk costs and fixed costs. only fixed costs.
a branch office or business segment that shows negative operating income should be shut down do you agree explain briefly select one a no for example if the revenue that will be lost exceed the cost that will be saved it the branch or business segment should not be shut down shut it down will only increase the loss B yes if the branch or business segment shows negative operating income it should be shut down without considering other factors shutting down will stop a drain on the company resources
The figure below shows a perfectly competitive firm. Revenue and cost (dollars per unit) 25 20 15 10 5 0 10 MC ATC 40 20 30 50 Output (thousands of units per year) If the market price is $15, the firm is incurring an economic loss is making an economic profit is making zero economic profit will immediately shut down might shut down but more information is needed about the AVC
Problem 09-07 (Algo) If a competitive firm has fixed costs of $18,500 per month and a minimum average variable cost of $92, at what price will it shut down? Instructions: Enter your response as a whole number. ok The firm will shut down once the price falls below $