Paulette, Camille, and Hortense each own wineries in France. They produce inexpensive, mass-market wines. Over the last
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To keep things simple, let€™s assume that each winemaker has calculated the optimal quantity to produce if they decide to stay in business; your job is simply to figure out if she should produce that amount or just shut down.
a. First, calculate each winemaker€™s profit.
b. Which of these women, if any, earned a profit?
c. Who should stay in business in the short run? Who should shut down?
d. Fill in the blank: Even if profit is negative, if revenues are _________variable costs, then it€™s best to stay open in the short run.
e. For which of these wineries, if any, is P > AC? You don€™t need to calculate any new numbers to answer this.
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