Initially, the market price was p = 20 and the competitive firm’s minimum average variable cost was 18, while its minimum average cost was 21. Should it shut down? Why? Now this firm’s average variable cost increases by 3 at every quantity, while other firms in the market are unaffected. What happens to its average cost? Should this firm shut down? Why?
Answer to relevant QuestionsShould a firm shut down if its revenue is R = $ 1,000 per week, a. Its variable cost is VC = $ 500, and its sunk fixed cost is F = $ 600? b. Its variable cost is VC = $ 1,001, and its sunk fixed cost F = $ 500? c. Its ...Fierce storms in October 2004 caused TomatoFest Organic Heirlooms Farm to end its tomato harvest two weeks early. According to Gary Ibsen, a partner in this small business (Carolyn Said, “Tomatoes in Trouble,” San ...Chinese art factories are flooding the world’s generic art market (Keith Bradsher, “Own Original Chinese Copies of Real Western Art!” New York Times, July 15, 2005). The value of bulk shipments of Chinese paintings to ...The North American Free Trade Agreement provides for two- way, long- haul trucking across the U. S.-Mexican border. U. S. truckers have objected, arguing that the Mexican trucks don’t have to meet the same environmental ...Why might a monopoly operate in any part (downward sloping, flat, upward sloping) of its long-run average cost curve, but a competitive firm will operate only at the bottom or in the upward-sloping section?
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